Item 1.
Business
Our
Company
We
are an early stage blank check company formed as a Delaware corporation for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer
to throughout this report as our initial business combination. While our efforts to identify a target business may span many industries
and regions around the world, we intend to focus our search for prospects within the technology industry.
On
November 13, 2019, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to effect a business combination
by and among (i) our company (ii) CS Merger Sub 1 Inc., a California corporation and a wholly owned subsidiary of our company
(“Merger Sub 1”), (iii) CS Merger Sub 2 LLC, a Delaware limited liability company and a wholly owned subsidiary of
our company (“Merger Sub 2”), (iv) Grid Dynamics International, Inc., a California corporation (“Grid Dynamics”),
and (v) Automated Systems Holdings Limited (“ASL”), a company incorporated in Bermuda with limited liability, solely
in its capacity as representative of the stockholders of Grid Dynamics immediately prior to the consummation of the business combination.
Grid
Dynamics is an emerging leader in driving enterprise-level digital transformation in Fortune 1000 companies. Since its inception
in 2006 in Menlo Park, California, as a grid and cloud consultancy firm, Grid Dynamics has been on the forefront of digital transformation,
working on big ideas like cloud computing, NOSQL, DevOps, microservices, big data and artificial intelligence (“AI”),
and quickly established itself as a provider of choice for technology and digital enterprise companies.
Upon
the consummation of the transactions contemplated by the Merger Agreement, (i) Grid Dynamics will become our wholly-owned subsidiary;
and (ii) we will change our name to “Grid Dynamics Holding, Inc.” and (iii) the selling security holders (other than
the selling security holders who have properly demanded appraisal rights in accordance with the California law,
in connection with the transactions described in the Merger Agreement) will be entitled to receive the merger consideration set
forth in the Merger Agreement (the “Business Combination”).
Consummation
of the transactions contemplated by the Merger Agreement is subject to customary conditions representations, warranties and covenants
in the Merger Agreement, including, among others, covenants with respect to the conduct of the business of our company and Grid
Dynamics during the period between execution of the Merger Agreement and the consummation of the Business Combination.
The
Merger Agreement and related agreements are further described in the Form 8-K filed by the Company on November 13, 2019. For
additional information regarding Grid Dynamics, the Merger Agreement and the Business Combination, see the Definitive Proxy
Statement on Schedule 14A filed by the Company on February 10, 2020.
Other
than as specifically discussed, this report does not assume the closing of the Business Combination.
Our
Mission
Our
goal is to consummate an initial business combination with a high-performing technology company valued between $500 million and
$1 billion. By leveraging our management’s track record, extensive industry experience, and a deep personal network we bring
substantial and symbiotic benefits to an acquired company.
The
benefits we offer to a target company encompass but are not limited to the following:
Expertise
in building successful companies: Our management team has significant experience leading private and public technology companies.
They have thrived in not only identifying disruptive innovations but also expanding their global presence and improving product
market fit, while recruiting and mentoring talent.
Creating
top-notch boards: Our Chief Executive Officer, President, Directors and advisors have served on more than 80 public and private
boards, both within and outside the technology sector. They have managed acquisitions, improved global growth, and navigated complicated
governance challenges while on these boards.
Understanding
and leveraging the benefits of being a public company: As a public company, we can offer numerous benefits to stakeholders.
These include, but are not limited to, (i) more liquid equity, which can be leveraged for growth and accretive acquisitions, (ii)
greater visibility and branding among customers, (iii) enhanced access to debt and equity capital markets, and (iv) more tangible
incentives for employee stock compensation, which are critical for technology companies.
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. We intend to acquire a company
with an enterprise value significantly above the net proceeds of our initial public offering and the sale of the placement units.
Depending on the size of the transaction or the number of public shares we become obligated to redeem, we may potentially utilize
several additional financing sources, including but not limited to the issuance of additional securities to the sellers of a target
business, debt issued to bank or other lenders or the owners of the target, a private placement to raise additional funds, or
a combination of the foregoing. 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 to meet our obligations or our working capital needs, we may need to obtain
additional financing.
Acquisition
Criteria
We
plan to continue to proactively and aggressively search for potential business combination candidates using our management team’s
and advisors’ relationships with technology company executives, venture capitalists and private equity firms. We believe
this direct sourcing method will allow us to identify actionable business combination opportunities efficiently and effectively.
We
have identified the following criteria that will serve as guidelines for evaluating acquisition opportunities, which we expect
to apply during our search. All are indicators of compelling growth potential. The attributes we most strongly seek include the
following:
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Industry. We
focus on the technology industry, where we have deep and sustained knowledge. We believe our management team’s extensive
experience in tech enables us to scout and evaluate a potential target quickly in order to secure favorable terms, as well
as plan post-transaction operational improvements;
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Size. We
focus on companies with valuations between $500 million and $1 billion. Such firms generally have proven business models,
and offer long-term risk adjusted return potential;
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Market opportunity. We
focus on investments in industry segments that have strong long-term growth prospects and significant overall size and potential;
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Growth over near-term
profitability. We focus on investments in companies that possess sustainable competitive advantages and strong unit
economics, while still promising substantial room for growth;
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Opportunity for
operational improvement. We seek companies that are stable but would also benefit from the infusion of our management
skills. This mentoring will drive improvements in the company’s processes, as well as its go-to-market and overall execution
strategy;
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Strong management. We
intend to seek companies with strong management teams already in place. We will spend significant time assessing a company’s
leadership and human fabric, and maximizing its efficiency over time;
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May benefit from
being public. We seek targets that can inherently benefit from a public listing. These include acquisition currency,
greater visibility and branding among customers, enhanced access to debt and equity capital markets, and more tangible incentives
for employee stock compensation;
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Maturity. We
focus on companies that have adequate processes and could readily operate in the public markets with strong governance, controls
and reporting in place;
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Appropriate valuations. We
are a rigorous, criteria-based, disciplined, and valuation-centric investor. We are focused on acquiring a target on terms
that we believe provide significant upside potential with limited risk.
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These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our
management team may deem relevant. In the event that we 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 proxy solicitation materials or tender offer documents that we would file with the U.S. Securities and Exchange Commission.
Initial
Business Combination
NASDAQ
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of
the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination.
Our board of directors will make the determination as to the fair market value of our initial business combination. If our board
of directors is not able to independently determine the fair market value of our initial business combination, we will obtain
an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions
with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able
to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if
it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty
as to the value of a target’s assets or prospects.
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
Business Combination Process
In
evaluating prospective business combinations, we have conducted, and expect to continue to conduct, a thorough due diligence review
process that encompasses, among other things, a review of historical and projected financial and operating data, meetings with
management and their advisors (if applicable), on-site inspection of facilities and assets, discussion with customers and suppliers,
legal reviews and other reviews as we deem appropriate.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor,
officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking
firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to our
company from a financial point of view.
Each
of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if
the retention or resignation of any such officers and directors were to be included by a target business as a condition to any
agreement with respect to our initial business combination.
Each
of our officers and directors presently has fiduciary or contractual obligations to other entities pursuant to which such officer
or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or directors
becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary
or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to
such entity. We believe, however, that the fiduciary duties or contractual obligations of our officers or directors will not materially
affect our ability to complete our initial business combination. Our amended and restated certificate of incorporation will provide
that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly
offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are
legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director
or officer is permitted to refer that opportunity to us without violating another legal obligation.
Our
officers and directors have agreed not to participate in the formation of, or become an officer or director of any other special
purpose acquisition company with a class of securities registered under the Securities Exchange Act of 1934, as amended, or the
Exchange Act, until we have entered into a definitive agreement regarding our initial business combination or we have liquidated
the trust account.
Our
Management Team
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, in the exercise of their respective business judgement, deem necessary to our affairs. The amount of time that any
member of our management team devotes in any time period 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. We do not have an employment agreement
with any member of our management team.
We
believe our management team’s operating and transaction experience and relationships with companies provides us with a substantial
number of potential business combination targets. Over the course of their careers, the members of our management team have developed
a broad network of contacts and corporate relationships in the technology industry. This network has grown through the activities
of our management team sourcing, acquiring and financing businesses, our management team’s relationships with sellers, financing
sources and target management teams and the experience of our management team in executing transactions under varying economic
and financial market conditions.
Initial
Business Combination
NASDAQ
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of
the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination.
Our board of directors will make the determination as to the fair market value of our initial business combination. If our board
of directors is not able to independently determine the fair market value of our initial business combination, we will obtain
an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions
with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able
to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if
it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty
as to the value of a target’s assets or prospects.
Status
as a Public Company
We
believe our structure makes us an attractive business combination partner to target businesses. As a public company, we offer
a target business an alternative to the traditional initial public offering through a merger or other business combination with
us. Following an initial business combination, we believe the target business would have greater access to capital and additional
means of creating management incentives that are better aligned with stockholders’ interests than it would as a private
company. A target business can further benefit by augmenting its profile among potential new customers and vendors and aid in
attracting talented employees. In a business combination transaction with us, the owners of the target business may, for example,
exchange their shares of stock in the target business for our shares of Class A common stock (or shares of a new holding company)
or for a combination of our shares of Class A common stock and cash, allowing us to tailor the consideration to the specific needs
of the sellers.
Although
there are various costs and obligations associated with being a public company, we believe target businesses will find this method
a more expeditious and cost effective method to becoming a public company than the typical initial public offering. The typical
initial public offering process takes a significantly longer period of time than the typical business combination transaction
process, and there are significant expenses in the initial public offering process, including underwriting discounts and commissions,
marketing and road show efforts that may not be present to the same extent in connection with an initial business combination
with us.
Furthermore,
once a proposed initial business combination is completed, the target business will have effectively become public, whereas an
initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market
conditions, which could delay or prevent the offering from occurring or could have negative valuation consequences. Following
an initial business combination, we believe the target business would then have greater access to capital and an additional means
of providing management incentives consistent with stockholders’ interests and the ability to use its shares as currency
for acquisitions. Being a public company can offer further benefits by augmenting a company’s profile among potential new
customers and vendors and aid in attracting talented employees.
While
we believe that our structure and our management team’s backgrounds makes us an attractive business partner, some potential
target businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek
stockholder approval of any proposed initial business combination, negatively.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As
such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not “emerging growth companies” including, but not limited to, not being required to comply
with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the
requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active
trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth
anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or
(c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held
by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than
$1.0 billion in non-convertible debt securities during the prior three-year period.
Financial
Position
With
funds available for an initial business combination in the amount of $216,316,036 (as of December 31, 2019), after payment
of $7,700,000 of deferred underwriting fees, in each case before fees and expenses associated with our initial business combination,
we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential
growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are
able to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing,
we have the flexibility to use the most efficient combination that allows us to tailor the consideration to be paid to the target
business to fit its needs and desires.
Effecting
Our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations until the consummation of our initial business combination.
We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private
placement of the placement units, the proceeds of the sale of our shares in connection with our initial business combination (pursuant
to backstop agreements we may enter into), shares issued to the owners of the target, debt issued to bank or other lenders or
the owners of the target, or a combination of the foregoing. We may seek to complete our initial business combination with a company
or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous
risks inherent in such companies and businesses.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust
account are used for payment of the consideration in connection with our initial business combination or used for redemptions
of our Class A common stock, we may apply the balance of the cash released to us from the trust account for general corporate
purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest
due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working
capital.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of
our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather
than using the amounts held in the trust account. In addition, we intend to target businesses larger than we could acquire with
the net proceeds of our initial public offering and the sale of the placement units, and may as a result be required to seek additional
financing to complete such proposed initial business combination. Subject to compliance with applicable securities laws, we would
expect to complete such financing only simultaneously with the completion of our initial business combination. In the case of
an initial business combination funded with assets other than the trust account assets, our proxy materials or tender offer documents
disclosing the initial business combination would disclose the terms of the financing and, only if required by law, we would seek
stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately, or through loans in
connection with our initial business combination.
Sources
of Target Businesses
Target
business candidates are brought to our attention from various unaffiliated sources, including investment bankers and investment
professionals. Target businesses are brought to our attention by such unaffiliated sources as a result of being solicited by us
by calls or mailings. These sources also introduce us to target businesses in which they think we may be interested on an unsolicited
basis, since many of these sources will have read our public filings and know what types of businesses we are targeting. Our officers
and directors, as well as our sponsor and their affiliates, also bring to our attention target business candidates that they become
aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as
attending trade shows or conventions. In addition, we 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
affiliates. We may engage professional firms or other individuals that specialize in business acquisitions in the future, in which
event we may pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length
negotiation based on the terms of the transaction. We will engage a finder only to the extent our management determines that the
use of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited
basis with a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s
fees is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the
trust account. In no event, however, will our sponsor or any of our existing officers or directors 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). None of our sponsor, executive officers or directors,
or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting fees from
a prospective business combination target in connection with a contemplated initial business combination. We pay an affiliate
of our sponsor a total of $15,000 per month for office space, utilities and secretarial and administrative support and reimburse
our sponsor and our officers, directors and advisors for any out-of-pocket expenses related to identifying, investigating and
completing an initial business combination. Some of our officers and directors may enter into employment or consulting agreements
with the post-transaction company following our initial business combination. The presence or absence of any such fees or arrangements
will not be used as a criterion in our selection process of an initial business combination candidate.
We
are not prohibited from pursuing an initial business combination with a target that is affiliated with our sponsor, officers or
directors or making the initial business combination through a joint venture or other form of shared ownership with our sponsor,
officers or directors. In the event we seek to complete our initial business combination with a target that is affiliated with
our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from independent investment
banking firm or another independent entity that commonly renders valuation opinions that such an initial business combination
is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
If
any of our officers or directors becomes aware of an initial business combination opportunity that falls within the line of business
of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such
business combination opportunity to such entity prior to presenting such business combination opportunity to us. Our officers
and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties
to us.
Selection
of a Target Business and Structuring of our Initial Business Combination
NASDAQ
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of
the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination.
The fair market value of our initial business combination will be determined by our board of directors based upon one or more
standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading
multiples of comparable public businesses or a valuation based on the financial metrics of transactions of comparable businesses.
If our board of directors is not able to independently determine the fair market value of our initial business combination, we
will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation
opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not
be able to make an independent determination of the fair market value of our initial business combination, it may be unable to
do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty
as to the value of a target’s assets or prospects. We do not intend to purchase multiple businesses in unrelated industries
in conjunction with our initial business combination. Subject to this requirement, our management has virtually unrestricted flexibility
in selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination
with another blank check company or a similar company with nominal operations.
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 business target, 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, interviews of customers and
suppliers, inspection of facilities, as well as a review of financial and other information that will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately
completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. In addition, we intend to focus our search for an initial business
combination in a single industry. By completing our initial business combination with only a single entity, our lack of diversification
may:
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subject us to negative
economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular
industry in which we operate after our initial business combination, and
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cause us to depend
on the marketing and sale of a single product or limited number of products or services.
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Limited
Ability to Evaluate the Target’s Management Team
Although
we closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial
business combination with that business, our assessment of the target business’ management may not prove to be correct.
In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company.
Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with
any certainty. The determination as to whether any of the members of our management team will remain with the combined company
will be made at the time of our initial business combination. While it is possible that one or more of our directors will remain
associated in some capacity with us following our initial business combination, it is unlikely that any of them will devote their
full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members of our
management team will have significant experience or knowledge relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company.
The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our
initial business combination.
Following
an initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target
business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will
have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve Our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder
approval if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business
or other legal reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we
may consider and whether stockholder approval is currently required under Delaware law for each such transaction.
Type
of Transaction
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Whether
Stockholder Approval is Required
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Purchase
of assets
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No
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Purchase
of stock of target not involving a merger with the company
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No
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Merger
of target into a subsidiary of the company
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No
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Merger
of the company with a target
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Yes
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Under
NASDAQ’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we issue shares
of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then
outstanding;
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any of our directors,
officers or substantial stockholders (as defined by NASDAQ rules) has a 5% or greater interest (or such persons collectively
have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and
the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power
of 5% or more; or
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the issuance or
potential issuance of common stock will result in our undergoing a change of control.
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Permitted
Purchases of our Securities
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their
affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or
following the completion of our initial business combination. There is no limit on the number of shares our initial stockholders,
directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law
and NASDAQ rules. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated
any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases
when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited
by Regulation M under the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender
offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules
under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject
to such rules, the purchasers will comply with such rules. Any such purchases will be reported pursuant to Section 13 and Section
16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None of the funds held in the
trust account will be used to purchase shares or public warrants in such transactions prior to completion of our initial business
combination.
The
purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby
increase the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition
in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial
business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of
public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted
to the warrantholders for approval in connection with our initial business combination. Any such purchases of our securities may
result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases
are made, the public “float” of our shares of Class A common stock or warrants may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading
of our securities on a national securities exchange.
Our
sponsor, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor,
officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly
or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with
our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into
a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem
their shares for a pro rata share of the trust account or vote against our initial business combination, whether or not such stockholder
has already submitted a proxy with respect to our initial business combination. Our sponsor, officers, directors, advisors or
their affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal
securities laws.
Any
purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the
Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe
harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical
requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers,
directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule
10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the
extent such purchases are subject to such reporting requirements.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the trust account as of two business days prior to the consummation of the initial business combination including interest
earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided
by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account
as of December 31, 2019 is approximately $10.18 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. 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 (along with Cantor and/or its designees) placement shares and any public shares
held by them in connection with the completion of our initial business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the initial
business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed
initial business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety
of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder
approval under the law or stock exchange listing requirement. Under NASDAQ rules, asset acquisitions and stock purchases would
not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions
where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation
would require stockholder approval. If we structure an initial business combination with a target company in a manner that requires
stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed initial business
combination. We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder
approval is required by law or stock exchange listing requirements or we choose to seek stockholder approval for business or other
legal reasons. So long as we obtain and maintain a listing for our securities on NASDAQ, we are required to comply with such rules.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will,
pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions
pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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file tender offer
documents with the SEC prior to completing our initial business combination which contain substantially the same financial
and other information about the initial business combination and the redemption rights as is required under Regulation 14A
of the Exchange Act, which regulates the solicitation of proxies.
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Upon
the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance
with Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through
a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business
days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination
until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not
tendering more than a specified number of public shares which are not purchased by our sponsor, 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 to be less than $5,000,001
upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we
are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which
may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than
we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain
stockholder approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions
in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation
of proxies, and not pursuant to the tender offer rules, and
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file proxy materials
with the SEC.
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In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders
present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power
of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count
toward this quorum and pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote their founder
shares and placement shares and any public shares purchased (including in open market and privately negotiated transactions) in
favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common
stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. As a
result, in addition to our initial stockholders’ founder shares and placement shares, we would need only 7,930,001, or 36.0%,
of the 22,000,000 public shares to be voted in favor of an initial business combination (assuming all outstanding shares are voted)
in order to have our initial business combination approved. We intend to give approximately 30 days (but not less than 10 days
nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial
business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more
likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares
irrespective of whether they vote for or against the proposed transaction.
Our
amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination and after
payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules)
or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. For example, the proposed initial business combination may require: (i) cash consideration to be paid to the target
or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the
retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business combination. In the
event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted
for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination
exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares,
and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection
with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation
provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder
is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking
redemption rights with respect to more than an aggregate of 15% of the shares sold in our initial public offering, which we refer
to as the “Excess Shares.” Such restriction shall also be applicable to our affiliates. We believe this restriction
will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability
to exercise their redemption rights against a proposed initial business combination as a means to force us or our management to
purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision,
a public stockholder holding more than an aggregate of 15% of the shares sold in our initial public offering could threaten to
exercise its redemption rights if such holder’s shares are not purchased by us or our management at a premium to the then-current
market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares
sold in our initial public offering without our prior consent, we believe we will limit the ability of a small group of stockholders
to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with an
initial business combination with a target that requires as a closing condition that we have a minimum net worth or a certain
amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess
Shares) for or against our initial business combination.
Tendering
Stock Certificates in Connection with 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 up to two business days prior to
the vote on the proposal to approve the initial business combination, or to deliver their shares to the transfer agent electronically
using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The proxy
materials that we will furnish to holders of our public shares in connection with our initial business combination will indicate
whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have
up to two days prior to the vote on the initial business combination to tender its shares if it wishes to seek to exercise its
redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of
their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker
whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not
we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of
exercising redemption rights regardless of the timing of when such delivery must be effectuated.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date of the stockholder meeting. 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 Business Combination with Grid Dynamics is not completed, we may continue to try to complete an initial business combination
with a different target by April 9, 2020.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have only until April 9, 2020 to complete our initial
business combination. If we are unable to complete our initial business combination by April 9, 2020, we will: (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income
taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject
in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless
if we fail to complete our initial business combination by April 9, 2020.
Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights
to liquidating distributions from the trust account with respect to any founder shares and (along with Cantor and/or its designees)
private placement shares held by them if we fail to complete our initial business combination by April 9, 2020. However, if our
sponsor, officers or directors acquire public shares, they will be entitled to liquidating distributions from the trust account
with respect to such public shares if we fail to complete our initial business combination by April 9, 2020.
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to redeem 100%
of our public shares if we do not complete our initial business combination by April 9, 2020 or (ii) with respect to any other
provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders
with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held
in the trust account and not previously released to us to pay our franchise and income taxes 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 to be less than
$5,000,001 upon consummation of our initial business combination and after payment of underwriters’ fees and commissions
(so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised
with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described
above), we would not proceed with the amendment or the related redemption of our public shares at such time.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors,
will be funded from amounts remaining out of the approximately $141,583 of proceeds held outside the trust account (as of December
31, 2019), although we cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest
being earned on the proceeds held in the trust account to pay any franchise and income tax obligations we may owe. However, if
those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent
that there is any interest accrued in the trust account not required to pay franchise and income taxes on interest income earned
on the trust account balance, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued
interest to pay those costs and expenses.
If
we were to expend all of the net proceeds of our initial public offering and the sale of the placement units, other than the proceeds
deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption
amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account
could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders.
We cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than
$10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or
make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided
for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any,
we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we have sought and will continue to seek to have all vendors, service providers, prospective target businesses or other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements
or even if they execute such agreements that they would be prevented from bringing claims against the trust account including
but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging
the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including
the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held
in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an
agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would
be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party
that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed
by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where
management is unable to find a service provider willing to execute a waiver. WithumSmith+Brown, PC, our independent registered
public accounting firm, and Cantor, the underwriters of the offering, will not execute agreements with us waiving such claims
to the monies held in the trust account.
In
addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services
rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent,
confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below
the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date
of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less
taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed
a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it
apply to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including
liabilities under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations,
nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that
our sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able
to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without
limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per
public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the
trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it
is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim,
our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce
its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may
choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative
to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked
our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy
those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption
price will not be less than $10.00 per public share.
We
seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also
not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities,
including liabilities under the Securities Act. We access to up to approximately $142,000 from the proceeds held outside the trust
account (as of December 31, 2019) with which to pay any such potential claims (including costs and expenses incurred in connection
with our liquidation, currently estimated to be no more than approximately $100,000). In the event that we liquidate and it is
subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our
trust account could be liable for claims made by creditors.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination by April 9, 2020 may be considered a liquidating
distribution under Delaware law. Delaware law provides that if a corporation complies with certain procedures set forth in Section
280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period
during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject
any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any
liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro
rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after
the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our initial business combination by April 9, 2020, is not considered a liquidating distribution under
Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings
that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the
statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of
three years, as in the case of a liquidating distribution. If we are unable to complete our initial business combination by April
9, 2020, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not
more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously
released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by
the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as
stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board
of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably
possible by April 9, 2020 and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may
extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations
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 seek to have all vendors, service providers, prospective target
businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim
of any kind in or to any monies held in the trust account. As a result of this obligation, the claims that could be made against
us are significantly limited and the likelihood that any claim that would result in any liability extending to the trust account
is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are
not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the
date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of
interest withdrawn to pay taxes and will not be liable as to any claims under our indemnity of the underwriters of our initial
public offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver
is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such
third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, we cannot assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we
file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts
received by our stockholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors
and/or may have acted in bad faith, thereby exposing itself and our company to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against
us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion
of our initial business combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder
vote to amend any provisions of our amended and restated certificate of incorporation (A) to modify the substance or timing of
our obligation to redeem 100% of our public shares if we do not complete our initial business combination by April 9, 2020 or
(B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, and
(iii) the redemption of all of our public shares if we are unable to complete our business combination by April 9, 2020, subject
to applicable law. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account.
In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in
connection with the initial business combination alone will not result in a stockholder’s redeeming its shares to us for
an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as described
above. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated
certificate of incorporation, may be amended with a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we have encountered and will 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, and operating businesses seeking strategic business combinations.
Many of these entities are well established and have extensive experience identifying and effecting business combinations directly
or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than
we do. Our ability to acquire larger target businesses is limited by our available financial resources. This inherent limitation
gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our obligation to pay
cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us
for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not
be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully
negotiating an initial business combination.
Employees
We
currently have two officers. These individuals are not obligated to devote any specific number of hours to our matters but they
devote as much of their time as they deem necessary and intend to continue doing so, in the exercise of their respective business
judgement, to our affairs until we have completed our initial business combination. The amount of time they will devote in any
time period will vary based on whether a target business has been selected for our initial business combination and the stage
of the initial business combination process we are in. We do not intend to have any full time employees prior to the completion
of our initial business combination. We do not have an employment agreement with any member of our management team.
Periodic
Reporting and Financial Information
Our
units, Class A common stock and warrants are registered under the Exchange Act and have reporting obligations, including the requirement
that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, this
report contains financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these
financial statements will need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances,
and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial
statement requirements may limit the pool of potential targets we may conduct an initial business combination with because some
targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules
and complete our initial business combination within the prescribed time frame. We cannot assure you that any particular target
business identified by us as a potential business combination candidate will have financial statements prepared in accordance
with GAAP or that the potential target business will be able to prepare its financial statements in accordance with the requirements
outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business.
While this may limit the pool of potential business combination candidates, we do not believe that this limitation will be material.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with this Annual
Report on Form 10-K. As long as we maintain our status as an emerging growth company, we will not be required to comply with the
independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact
that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on
us as compared to other companies because a target company with which we seek to complete our business combination may not be
in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the
internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such business combination.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth
anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07
billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of Class A
common stock that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which
we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Corporate
Information
Our
executive offices are located at 7660 Fay Avenue, Suite H, Unit 339, La Jolla, California 92037 and our telephone number at that
location is (619)-736-6855.
Item 1A.
Risk Factors
You
should carefully consider all of the risk factors and all the other information contained in this report, including the financial
statements. If any of the following risks occur, our business, financial condition or results of operations may be materially
and adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part
of your investment. The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own
investigation with respect to us and our business. For risk factors related to Grid Dynamics, see the Preliminary Proxy Statement
on Schedule A filed by the Company on November 27, 2019, as amended and supplemented.
We
are a company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our
business objective.
We
are a company with no operating results. Because we lack an operating history, you have no basis upon which to evaluate our ability
to achieve our business objective of completing our initial business combination with one or more target businesses. We may be
unable to complete our initial business combination. If we fail to complete our initial business combination, we will never generate
any operating revenues.
Our
auditors have expressed substantial doubt as to our ability to continue as a going concern in their report.
In
its report on our financial statements for the year ended December 31, 2019, our independent registered public accounting firm
included an explanatory paragraph expressing substantial doubt regarding our ability to continue as a going concern. A “going
concern” opinion means, in general, that our independent registered public accounting firm has substantial doubt about our
ability to continue our operations unless we complete a business combination by April 9, 2020
The
financial statements included in this report do not take into account the consequences of a failure to complete our initial
business combination by April 9, 2020.
The
financial statements included in this report have been prepared assuming that we would continue as a going concern. As discussed
in Note 1 to our financial statements for the year ended December 31, 2019, we are required to complete a business combination
by April 9, 2020. The possibility of our initial business combination not being consummated raises some doubt as to our ability
to continue as a going concern and the financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
Our
public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may
complete our initial business combination even though a majority of our public stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial business combination unless the initial business combination
would require stockholder approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder
vote for business or other legal reasons. Except as required by law, the decision as to whether we will seek stockholder approval
of a proposed initial business combination or will allow stockholders to sell their shares to us in a tender offer will be made
by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether
the terms of the transaction would otherwise require us to seek stockholder approval. Accordingly, we may complete our initial
business combination even if holders of a majority of our public shares do not approve of the initial business combination we
complete.
If
we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such
initial business combination, regardless of how our public stockholders vote.
Pursuant
to the letter agreement, our sponsor, officers and directors have agreed to vote their founder shares and placement shares, as
well as any public shares purchased (including in open market and privately negotiated transactions), in favor of our initial
business combination. As a result, in addition to our initial stockholders’ founder shares and placement shares, we would
need only 7,930,001, or 36.0% of the 22,000,000 public shares sold in our initial public offering to be voted in favor of an initial
business combination (assuming all outstanding shares are voted) in order to have our initial business combination approved. Our
initial stockholders own shares representing approximately 21.8% of our outstanding shares of common stock. Accordingly, if we
seek stockholder approval of our initial business combination, after approval of our board, the agreement by our initial stockholders
to vote in favor of our initial business combination will increase the likelihood that we will receive the requisite stockholder
approval for such initial business combination.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise
of your right to redeem your shares from us for cash, unless we seek stockholder approval of the initial business combination.
At
the time of your investment in us, you may not be provided with an opportunity to evaluate the specific merits or risks of our
initial business combination. Since our board of directors may complete an initial business combination without seeking stockholder
approval, public stockholders may not have the right or opportunity to vote on the initial business combination, unless we seek
such stockholder vote. Accordingly, if we do not seek stockholder approval, your only opportunity to affect the investment decision
regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which
will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe
our initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into an initial business combination with a target.
We
may seek to enter into an initial business combination agreement with a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the initial business combination.
Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than
$5,000,001 upon consummation of our initial business combination and after payment of underwriters’ fees and commissions
(so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. Consequently, if accepting all properly
submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial
business combination and after payment of underwriters’ fees and commissions or such greater amount necessary to satisfy
a closing condition as described above, we would not proceed with such redemption and the related business combination and may
instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant
to enter into an initial business combination with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us
to complete the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise
their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares
that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash
in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve
a portion of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a
larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to
reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third party
financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore,
this dilution would increase to the extent that the anti-dilution provision of the Class B common stock result in the issuance
of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock at the time of our business combination.
The above considerations may limit our ability to complete the most desirable business combination available to us or optimize
our capital structure. The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for
any shares that are redeemed in connection with an initial business combination. The per-share amount we will distribute to stockholders
who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions,
the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the deferred underwriting
commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the
probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order
to redeem your stock.
If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account
until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open
market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either
situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption
until we liquidate or you are able to sell your stock in the open market.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses
leverage over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential
business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our initial
business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning an initial business combination will be aware that
we must complete our initial business combination by April 9, 2020. Consequently, such target business may obtain leverage over
us in negotiating an initial business combination, knowing that if we do not complete our initial business combination with that
particular target business, we may be unable to complete our initial business combination with any target business. This risk
will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence
and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We
may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all
operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public
stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire
worthless.
Our
amended and restated certificate of incorporation provides that we must complete our initial business combination by April 9,
2020. We may not be able to find a suitable target business and complete our initial business combination within such time period.
If we have not completed our initial business combination within such time period, we will: (i) cease all operations except for
the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the
public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including
interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes
(less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which
redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such
case, our public stockholders may only receive $10.00 per share, and our warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 per share on the redemption of their shares.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates
may elect to purchase shares or warrants from public stockholders, which may influence a vote on a proposed initial business combination
and reduce the public “float” of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase
shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either prior to
or following the completion of our initial business combination, although they are under no obligation to do so. However, they
have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions
for any such transactions. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions.
Such
a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares is
no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor,
directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders
who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior
elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of the initial business
combination and thereby increase the likelihood of obtaining stockholder approval of the initial business combination, or to satisfy
a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at
the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose
of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants
on any matters submitted to the warrant holders for approval in connection with our initial business combination. Any such purchases
of our securities may result in the completion of our initial business combination that may not otherwise have been possible.
Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are
subject to such reporting requirements.
In
addition, if such purchases are made, the public “float” of our Class A common stock or public warrants and the number
of beneficial holders of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing
or trading of our securities on a national securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination,
or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial
business combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials,
as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or
tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business
combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares.
For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders
or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date
set forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to
approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer
agent electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may not be
redeemed.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate
your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion
of an initial business combination, and then only in connection with those shares of Class A common stock that such stockholder
properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance
or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by April
9, 2020 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination
activity and (iii) the redemption of our public shares if we are unable to complete an initial business combination by April 9,
2020, subject to applicable law and as further described herein. In no other circumstances will a public stockholder have any
right or interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust
account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares
or warrants, potentially at a loss.
NASDAQ
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
Our
securities are currently listed on NASDAQ. We cannot assure you that our securities will continue to be, listed on NASDAQ in the
future or prior to our initial business combination. In order to continue listing our securities on NASDAQ prior to our initial
business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum
amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 public
holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with
NASDAQ’s initial listing requirements, which are more rigorous than NASDAQ’s continued listing requirements, in order
to continue to maintain the listing of our securities on NASDAQ. For instance, our stock price would generally be required to
be at least $4.00 per share, our stockholders’ equity would generally be required to be at least $5.0 million and we would
be required to have a minimum of 300 round lot holders of our securities. We cannot assure you that we will be able to meet those
initial listing requirements at that time.
If
NASDAQ delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant
material adverse consequences, including:
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a limited availability
of market quotations for our securities;
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reduced liquidity
for our securities;
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a determination
that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock
to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market
for our securities;
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a limited amount
of news and analyst coverage; and
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a decreased ability
to issue additional securities or obtain additional financing in the future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because our units, Class A common stock
and warrants are listed on NASDAQ, our units, Class A common stock and warrants are covered securities. Although the states are
preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there
is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered
securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of
securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check
companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check
companies in their states. Further, if we were no longer listed on NASDAQ, our securities would not be covered securities and
we would be subject to regulation in each state in which we offer our securities, including in connection with our initial business
combination.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the placement units are intended to be used to complete an initial
business combination with a target business that has not been identified, we may be deemed to be a “blank check” company
under the United States securities laws. However, because we had net tangible assets in excess of $5,000,000 upon the completion
of our initial public offering and we filed a Current Report on Form 8-K, including an audited balance sheet demonstrating such
fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly,
investors are not afforded the benefits or protections of those rules. Among other things, this means that our securities were
immediately tradable and we may have a longer period of time to complete our business combination than do companies subject to
Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until
the funds in the trust account were released to us in connection with our completion of an initial business combination
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you
will lose the ability to redeem all such shares in excess of 15% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a
public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 15% of the shares sold in our initial public offering without our prior consent,
which we refer to as the “Excess Shares.” However, we would not be restricting our stockholders’ ability to
vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the
Excess Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a
material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive
redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result, you
will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your
stock in open market transactions, potentially at a loss.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for
us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances,
and our warrants will expire worthless.
We
encounter intense competition from other entities having a business objective similar to ours, including private investors (which
may be individuals or investment partnerships), other blank check companies and other entities competing for the types of businesses
we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying
and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many
of these competitors possess greater technical, human and other resources or more industry knowledge than we do, and our financial
resources are relatively limited when contrasted with those of many of these competitors. While we believe there are numerous
target businesses we could potentially acquire with the net proceeds of our initial public offering and the sale of the placement
units, our ability to compete with respect to the acquisition of certain target businesses that are sizable is limited by our
available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain
target businesses. Furthermore, because we are obligated to pay cash for the shares of Class A common stock which our public stockholders
redeem in connection with our initial business combination, target companies will be aware that this may reduce the resources
available to us for our initial business combination. This may place us at a competitive disadvantage in successfully negotiating
an initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.00 per share upon our liquidation.
If
the net proceeds of our initial public offering and the sale of the placement units not being held in the trust account are insufficient
to allow us to operate until April 9, 2020 we may be unable to complete our initial business combination, in which case our public
stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire
worthless.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate for at least until April 9, 2020,
assuming that our initial business combination is not completed during that time. We believe that the funds available to us outside
of the trust account as of December 31, 2019 of approximately $142,000 are sufficient to allow us to operate until at least April
9, 2020; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of
the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion
of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements
designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable
to such target businesses) with respect to a particular proposed initial business combination, although we do not have any current
intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity
from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise),
we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If
we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per
share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders
may receive less than $10.00 per share upon our liquidation.
If
the net proceeds of our initial public offering and the sale of the placement units not being held in the trust account are insufficient,
it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination
and we will depend on loans from our sponsor or management team to fund our search for an initial business combination, to pay
our franchise and income taxes and to complete our initial business combination. If we are unable to obtain these loans, we may
be unable to complete our initial business combination.
Of
the net proceeds of our initial public offering and the sale of the placement units, only approximately $142,000 (as of December
31, 2019) is available to us outside the trust account to fund our working capital requirements. If we are required to seek additional
capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to
liquidate. None of our sponsor, members of our management team nor any of their affiliates is under any obligation to advance
funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds
released to us upon completion of our initial business combination. Up to $1,500,000 of such loans may be convertible into units,
at a price of $10.00 per unit at the option of the lender. The units would be identical to the placement units. Prior to
the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate
of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all
rights to seek access to funds in our trust account. If we are unable to obtain these loans, we may be unable to complete our
initial business combination. If we are unable to complete our initial business combination because we do not have sufficient
funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders
may only receive approximately $10.00 per share on our redemption of our public shares, and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares.
Subsequent
to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative effect on our financial condition, results of operations and
our stock price, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
surface all material issues that may be present inside a particular target business, that it would be possible to uncover all
material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our
control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure
our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully
identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with
our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In
addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance the initial
business combination. Accordingly, any stockholders who choose to remain stockholders following the initial business combination
could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value
unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of
care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that
the proxy solicitation or tender offer materials, as applicable, relating to the initial business combination constituted an actionable
material misstatement or omission.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we seek to have
all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not
be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary
responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order
to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party
refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if
management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
WithumSmith+Brown, PC, our independent registered public accounting firm, and the underwriters of the offering, did not execute
agreements with us waiving such claims to the monies held in the trust account.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed
timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required
to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following
redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per share
initially held in the trust account, due to claims of such creditors. Pursuant to a letter agreement, our sponsor has agreed that
it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective
target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination
agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the
actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than
$10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not
apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies
held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the
underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. However,
we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our
sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities
of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. None of our officers
or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target
businesses.
Our directors may decide not to enforce
the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available
for distribution to our public stockholders.
In the event that
the proceeds in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per share
held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions
in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts
that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent
directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While we currently
expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary
duties may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent
directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome
is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the
trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
We may not have sufficient funds to
satisfy indemnification claims of our directors and executive officers.
We have agreed to
indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to
waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against
the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only
if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation
to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for
breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against
our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore,
a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against
our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of
punitive damages.
If, after we distribute
the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed
as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims
of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and
the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing
the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law,
and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced.
If we are deemed to be an investment
company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to
be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.
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In addition, we may
have imposed upon us burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In order not to be
regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that
we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not
include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify
and complete an initial business combination and thereafter to operate the post-transaction business or assets for the long term.
We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses
or assets or to be a passive investor.
We do not believe
that our principal activities subject us to the Investment Company Act. To this end, the proceeds held in the trust account may
only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment
Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement,
the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments,
and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling
businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company”
within the meaning of the Investment Company Act. The trust account is intended as a holding place for funds pending the earliest
to occur of: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance
or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by April
9, 2020 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity;
or (iii) absent an initial business combination by April 9, 2020, our return of the funds held in the trust account to our public
stockholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed
to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these
additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability
to complete an initial business combination or may result in our liquidation. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and
our warrants will expire worthless.
Changes in laws or regulations, or a
failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete
our initial business combination and results of operations.
We are subject to
laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain
SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming
and costly.
Those laws and regulations
and their interpretation and application may also change from time to time and those changes could have a material adverse effect
on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as
interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete
our initial business combination and results of operations.
Our stockholders may be held liable
for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the
event we do not complete our initial business combination by April 9, 2020 may be considered a liquidating distribution under Delaware
law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable
provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against
the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting
period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is
our intention to redeem our public shares as soon as reasonably possible following the 18th month from the closing
of our initial public offering in the event we do not complete our initial business combination and, therefore, we do not intend
to comply with the foregoing procedures.
Because we will not
be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time
that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our
operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be
from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies
with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser
of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the
stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess
all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to
the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary
of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination by April 9, 2020 is not considered a liquidating
distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of
legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174
of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution,
instead of three years, as in the case of a liquidation or distribution.
We have not registered the shares of
Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time,
and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being
able to exercise its warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants is not registered,
qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant
and such warrant may have no value and expire worthless.
We have not registered
the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws
at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later
than 15 business days after the closing of our initial business combination, we will use our best efforts to file with the SEC
a registration statement for the registration under the Securities Act of the shares of Class A common stock issuable upon exercise
of the warrants and thereafter will use our best efforts to cause the same to become effective within 60 business days following
our initial business combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise
of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure
you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information
set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein
are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants issued in our initial
public offering are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on
a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue
any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or
qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding
the foregoing, if a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective
within a specified period following the consummation of our initial business combination, warrant holders may, until such time
as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration
statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided
that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise
their warrants on a cashless basis. We will use our best efforts to register or qualify the shares under applicable blue sky laws
to the extent an exemption is not available. In no event will we be required to net cash settle any warrant, or issue securities
or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying
the warrants under applicable state securities laws and there is no exemption available. If the issuance of the shares upon exercise
of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will
not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired
their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A common
stock included in the units. If and when the warrants become redeemable by us, we may not exercise our redemption right if the
issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable
state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or
qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants were
offered by us in our initial public offering. However, there may be instances in which holders of our public warrants may be unable
to exercise such public warrants but holders of our placement warrants may be able to exercise such placement warrants.
If you exercise your public warrants
on a “cashless basis,” you will receive fewer shares of Class A common stock from such exercise than if you were to
exercise such warrants for cash.
There are circumstances
in which the exercise of the public warrants may be required or permitted to be made on a cashless basis. First, if a registration
statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business
day after the closing of our initial business combination, warrantholders may, until such time as there is an effective registration
statement, exercise warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption.
Second, if a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective
within a specified period following the consummation of our initial business combination, warrant holders may, until such time
as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration
statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act,
provided that such exemption is available; if that exemption, or another exemption, is not available, holders will not be able
to exercise their warrants on a cashless basis. Third, if we call the public warrants for redemption, our management will have
the option to require all holders that wish to exercise warrants to do so on a cashless basis. In the event of an exercise on
a cashless basis, a holder would pay the warrant exercise price by surrendering the warrants for that number of shares of Class
A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying
the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value”
(as defined in the next sentence) by (y) the fair market value. The “fair market value” is the average reported last
sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the
notice of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as
applicable. As a result, you would receive fewer shares of Class A common stock from such exercise than if you were to exercise
such warrants for cash.
The grant of registration rights to
our initial stockholders may make it more difficult to complete our initial business combination, and the future exercise of such
rights may adversely affect the market price of our Class A common stock.
Pursuant to a registration
rights agreement, our initial stockholders and their permitted transferees can demand that we register the placement warrants,
the shares of Class A common stock issuable upon exercise of the placement warrants, the shares of Class A common stock issuable
upon conversion of the founder shares, the shares of Class A common stock included in the placement units and holders of unit that
may be issued upon conversion of working capital loans may demand that we register such Class A common stock, warrants or the Class
A common stock issuable upon exercise of such units and warrants. We will bear the cost of registering these securities. The registration
and availability of such a significant number of securities for trading in the public market may have an adverse effect on the
market price of our Class A common stock. In addition, the existence of the registration rights may make our initial business combination
more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they
seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A
common stock that is expected when the securities owned by our initial stockholders or holders of working capital loans or their
respective permitted transferees are registered.
Because we are not limited to evaluating
a target business in a particular industry sector, you will be unable to ascertain the merits or risks of any particular target
business’s operations.
We seek to complete
an initial business combination with companies in the technology industry but may also pursue other business combination opportunities,
except that we will not, under our amended and restated certificate of incorporation, be permitted to effectuate our initial business
combination with another blank check company or similar company with nominal operations. There is currently no basis to evaluate
the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity,
financial condition or prospects. To the extent we complete our initial business combination, we may be affected by numerous risks
inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an
entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations
of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks
inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant
risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our
control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct
investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders who choose to remain
stockholders following our initial business combination could suffer a reduction in the value of their securities. Such stockholders
are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due
to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully
bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the
business combination contained an actionable material misstatement or material omission.
Past performance by our management team
and advisors may not be indicative of future performance of an investment in us.
Past performance by
our management team and advisors is not a guarantee either (i) of success with respect to any business combination we may consummate
or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should not rely on the historical
record of our management team’s or advisors’ performance as indicative of our future performance of an investment in
the company or the returns the company will, or is likely to, generate going forward. Additionally, in the course of their respective
careers, members of our management team have been involved in businesses and deals that were unsuccessful. Our officers, directors
and advisors have not had experience with blank check companies or special purpose acquisition companies in the past.
We may seek business combination opportunities
in industries or sectors which may or may not be outside of our management’s area of expertise.
Although we are focused
on identifying technology companies, we will consider an initial business combination outside of our management’s area of
expertise if an initial business combination candidate is presented to us and we determine that such candidate offers an attractive
business combination opportunity for our company or we are unable to identify a suitable candidate in this sector after having
expanded a reasonable amount of time and effort in an attempt to do so. Although our management will endeavor to evaluate the risks
inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all
of the significant risk factors. We also cannot assure you that an investment in our securities will not ultimately prove to be
less favorable to investors than a direct investment, if an opportunity were available, in an initial business combination candidate.
In the event we elect to pursue a business combination outside of the areas of our management’s expertise, our management’s
expertise may not be directly applicable to its evaluation or operation, and the information contained in this Report regarding
the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire.
As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly,
any stockholders who choose to remain stockholders following our initial business combination could suffer a reduction in the value
of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Although we have identified general
criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial
business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which
we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which
we enter into our initial business combination will not have all of these positive attributes. If we complete our initial business
combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide
to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder approval
of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable
to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation
of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less
than $10.00 per share on the redemption of their shares.
We may seek business combination opportunities
with a financially unstable business or an entity lacking an established record of revenue, cash flow or earnings, which could
subject us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
To the extent we complete
our initial business combination with a financially unstable business or an entity lacking an established record of revenues or
earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include
volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors will
endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all
of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may
be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact
a target business.
We are not required to obtain a fairness
opinion and consequently, you may have no assurance from an independent source that the price we are paying for the business is
fair to our company from a financial point of view.
Unless we complete
our initial business combination with an affiliated entity or our board cannot independently determine the fair market value of
the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm or another
independent entity that commonly renders valuation opinions that the price we are paying is fair to our company from a financial
point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will
determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed
in our proxy materials or tender offer documents, as applicable, related to our initial business combination.
We may issue additional common stock
or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial
business combination. We may also issue shares of Class A common stock upon the conversion of the Class B common stock at a ratio
greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in
our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and likely
present other risks.
Our amended and restated
certificate of incorporation authorizes the issuance of up to 100,000,000 shares of Class A common stock, par value $0.0001 per
share, 10,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value
$0.0001 per share. There are 66,040,000 and 4,500,000 authorized but unissued shares of Class A common stock and Class B common
stock, respectively, available for issuance, which amount takes into account the shares of Class A common stock reserved for issuance
upon exercise of outstanding warrants but not the shares of Class A common stock issuable upon conversion of Class B common stock.
There are currently no shares of preferred stock issued and outstanding. Shares of Class B common stock are convertible into shares
of our Class A common stock initially at a one-for-one ratio but subject to adjustment as set forth herein, including in certain
circumstances in which we issue Class A common stock or equity-linked securities related to our initial business combination. Shares
of Class B common stock are also convertible at the option of the holder at any time.
We may issue a substantial
number of additional shares of common or preferred stock to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination (although our amended and restated certificate of incorporation provides
that we may not issue securities that can vote with common stockholders on matters related to our pre-initial business combination
activity). We may also issue shares of Class A common stock upon conversion of the Class B common stock at a ratio greater than
one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended
and restated certificate of incorporation. However, our amended and restated certificate of incorporation provides, among other
things, that prior to our initial business combination, we may not issue additional shares of capital stock that would entitle
the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination. These provisions
of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation,
may be amended with the approval of our stockholders. However, our executive officers and directors have agreed, pursuant to a
written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation (A)
to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business
combination by April 9, 2020 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business
combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon
approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust
account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares.
The issuance of additional
shares of common or preferred stock:
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may significantly dilute the equity interest of investors in our initial public offering;
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may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
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could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our units, Class A common stock and/or warrants.
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Resources could be wasted in researching
business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of our trust account
and our warrants will expire worthless.
The investigation
of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other
instruments requires substantial management time and attention and substantial costs for accountants, attorneys, consultants and
others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed
transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may
fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event
will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares.
Our ability to successfully effect our
initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some
of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations
and profitability of our post-combination business.
Our ability to successfully
effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the
target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business
in senior management or advisory positions following our initial business combination, it is likely that some or all of the management
of the target business will remain in place. While we intend to closely scrutinize any individuals we employ after our initial
business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals
may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time
and resources helping them become familiar with such requirements. In addition, the officers and directors of an initial business
combination candidate may resign upon completion of our initial business combination. The departure of an initial business combination
target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role
of an initial business combination candidate’s key personnel upon the completion of our initial business combination cannot
be ascertained at this time. Although we contemplate that certain members of an initial business combination candidate’s
management team will remain associated with the initial business combination candidate following our initial business combination,
it is possible that members of the management of an initial business combination candidate will not wish to remain in place. The
loss of key personnel could negatively impact the operations and profitability of our post-combination business.
We are dependent upon our executive
officers and directors and their departure could adversely affect our ability to operate.
Our operations are
dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that
our success depends on the continued service of our executive officers and directors, at least until we have completed our initial
business combination. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or
executive officers. The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental
effect on us.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination. These agreements may provide
for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of
interest in determining whether a particular business combination is the most advantageous.
Our key personnel
may be able to remain with the company after the completion of our initial business combination only if they are able to negotiate
employment or consulting agreements in connection with the initial business combination. Such negotiations would take place simultaneously
with the negotiation of the initial business combination and could provide for such individuals to receive compensation in the
form of cash payments and/or our securities for services they would render to us after the completion of the initial business combination.
The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business.
However, we believe the ability of such individuals to remain with us after the completion of our initial business combination
will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.
There is no certainty, however, that any of our key personnel will remain with us after the completion of our initial business
combination. We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us.
The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
We may have a limited ability to assess
the management of a prospective target business and, as a result, may effect our initial business combination with a target business
whose management may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively
impact the value of our stockholders’ investment in us.
When evaluating the
desirability of effecting our initial business combination with a prospective target business, our ability to assess the target
business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to
manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders who choose to remain stockholders following the initial business combination could suffer a reduction in the value
of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Our officers and directors allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our
affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors
are not required to, and do not, commit their full time to our affairs, which may result in a conflict of interest in allocating
their time between our operations and our search for an initial business combination and their other businesses. We do not intend
to have any full-time employees prior to the completion of our initial business combination. Each of our officers is engaged in
other business endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute
any specific number of hours per week to our affairs. Our independent directors may also serve as officers or board members for
other entities. If our officers’ and directors’ other business affairs require them to devote substantial amounts of
time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which
may have a negative impact on our ability to complete our initial business combination.
Certain of our officers and directors
are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended
to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity
a particular business opportunity should be presented.
Until we consummate
our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses.
Our sponsor and officers and directors are, and may in the future become, affiliated with entities (such as operating companies
or investment vehicles) that are engaged in a similar business, although they may not participate in the formation of, or become
an officer or director of, any other special purpose acquisition companies with a class of securities registered under the Exchange
Act until we have entered into a definitive agreement regarding our initial business combination or we have liquidated the trust
account.
Our officers and directors
also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which
they owe certain fiduciary or contractual duties.
Accordingly, they
may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts
may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to
us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered
to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director
or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise
be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without
violating another legal obligation.
Our officers, directors, security holders
and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted
a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary
or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have
an interest. In fact, we may enter into an initial business combination with a target business that is affiliated with our sponsor,
our directors or officers, although we do not intend to do so. We do not have a policy that expressly prohibits any such persons
from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities
may have a conflict between their interests and ours.
We may engage in an initial business
combination with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, officers,
directors or existing holders which may raise potential conflicts of interest.
In light of the involvement
of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our
sponsor, officers or directors. Our directors also serve as officers and board members for other entities. Such entities may compete
with us for business combination opportunities. Despite our agreement to obtain an opinion from an independent investment banking
firm or another independent entity that commonly renders valuation opinions, regarding the fairness to our stockholders from a
financial point of view of an initial business combination with one or more businesses affiliated with our officers, directors
or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the initial business combination
may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since our sponsor, officers and directors
will lose their entire investment in us if our initial business combination is not completed, a conflict of interest may arise
in determining whether a particular business combination target is appropriate for our initial business combination.
Our sponsor purchased
an aggregate of 5,500,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. The founder
shares will be worthless if we do not complete an initial business combination. Our sponsor and Cantor also purchased an aggregate
of 640,000 placement units at a price of $10.00 per placement unit (530,000 placement units by our sponsor and 110,000 placement
units by Cantor, for an aggregate purchase price of $6,400,000. Each placement unit consists of one share of Class A common
stock and one-half of one warrant. Each whole warrant is exercisable to purchase one whole share of common stock at $11.50 per
share. These securities will also be worthless if we do not complete an initial business combination. Holders of founder shares
and placement shares have agreed (A) to vote any such shares owned by them in favor of any proposed initial business combination
and (B) not to redeem any such shares in connection with a stockholder vote to approve a proposed initial business combination.
In addition, we may obtain loans from our sponsor, affiliates of our sponsor or an officer or director. The personal and financial
interests of our officers and directors may influence their motivation in identifying and selecting a target business combination,
completing an initial business combination and influencing the operation of the business following the initial business combination.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete an initial business combination, which may adversely affect our leverage and financial
condition and thus negatively impact the value of our stockholders’ investment in us.
We may choose to incur
substantial debt to complete our initial business combination. We have agreed that we will not incur any indebtedness unless we
have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust
account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust account. Nevertheless,
the incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
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our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
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our inability to pay dividends on our common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and
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other disadvantages compared to our competitors who have less debt.
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We may only be able to complete one
business combination with the proceeds of our initial public offering and the sale of the placement units, which will cause us
to be solely dependent on a single business which may have a limited number of services and limited operating activities. This
lack of diversification may negatively impact our operating results and profitability.
Of the net proceeds
from our initial public offering and the sale of the placement units, $224,024,645.91 is available as of December 31, 2019 to complete
our initial business combination and pay related fees and expenses (which includes up to $7,000,000 for the payment of deferred
underwriting commissions).
We may effectuate
our initial business combination with a single target business or multiple target businesses simultaneously or within a short period
of time. However, we may not be able to effectuate our initial business combination with more than one target business because
of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if
they had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack
of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which
may have the resources to complete several business combinations in different industries or different areas of a single industry.
In addition, we intend to focus our search for an initial business combination in a single industry. Accordingly, the prospects
for our success may be:
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solely dependent upon the performance of a single business, property or asset, or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination
and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to
simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that
our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more
difficult for us, and delay our ability, to complete our initial business combination. We do not, however, intend to purchase multiple
businesses in unrelated industries in conjunction with our initial business combination. With multiple business combinations, we
could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due
diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of
the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial
business combination with a private company about which little information is available, which may result in an initial business
combination with a company that is not as profitable as we suspected, if at all.
In pursuing our initial
business combination strategy, we may seek to effectuate our initial business combination with a privately held company. Very little
public information generally exists about private companies, and we could be required to make our decision on whether to pursue
a potential initial business combination on the basis of limited information, which may result in an initial business combination
with a company that is not as profitable as we suspected, if at all.
Our management may not be able to maintain
control of a target business after our initial business combination.
We may structure an
initial business combination so that the post-transaction company in which our public stockholders own shares will own less than
100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will
not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting
securities of the target, our stockholders prior to the initial business combination may collectively own a minority interest in
the post business combination company, depending on valuations ascribed to the target and us in the initial business combination.
For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange
for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as
a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction
could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority
stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s
stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our
control of the target business. We cannot provide assurance that, upon loss of control of a target business, new management will
possess the skills, qualifications or abilities necessary to profitably operate such business.
We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete an initial business combination with
which a substantial majority of our stockholders do not agree.
Our amended and restated
certificate of incorporation will not provide a specified maximum redemption threshold, except that in no event will we redeem
our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial
business combination and after payment of underwriters’ fees and commissions (such that we are not subject to the SEC’s
“penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement
relating to our initial business combination. As a result, we may be able to complete our initial business combination even though
a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek
stockholder approval of our initial business combination and do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor,
officers, directors, advisors or their affiliates. In the event the aggregate cash consideration we would be required to pay for
all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will
not complete the initial business combination or redeem any shares, all shares of Class A common stock submitted for redemption
will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business
combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments,
including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of
incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination
that our stockholders may not support.
In order to effectuate
an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters
and modified governing instruments, including their warrant agreements. For example, blank check companies have amended the definition
of business combination, increased redemption thresholds and extended the time to consummate an initial business combination and,
with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other
securities. Amending our amended and restated certificate of incorporation will require the approval of holders of 65% of our
common stock, and amending our warrant agreement will require a vote of holders of at least 65% of the public warrants. In addition,
our amended and restated certificate of incorporation requires us to provide our public stockholders with the opportunity to redeem
their public shares for cash if we propose an amendment to our amended and restated certificate of incorporation (A) to modify
the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination
by April 9, 2020 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination
activity. To the extent any such amendments would be deemed to fundamentally change the nature of any securities offered through
this registration statement, we would register, or seek an exemption from registration for, the affected securities. We cannot
assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial business
combination in order to effectuate our initial business combination.
The provisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement
governing the release of funds from our trust account), including an amendment to permit us to withdraw funds from the trust account
such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced or eliminated,
may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that of some
other blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation
and the trust agreement to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our amended and restated
certificate of incorporation provides that any of its provisions related to pre-initial business combination activity (including
the requirement to deposit proceeds of our initial public offering and the private placement of warrants into the trust account
and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described
herein and including to permit us to withdraw funds from the trust account such that the per share amount investors will receive
upon any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by holders of 65% of our
common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from
our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances,
our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled
to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. We may not issue additional securities
that can vote on amendments to our amended and restated certificate of incorporation. Our initial stockholders, who will collectively
beneficially own approximately 21.8% of our common stock (including the private placement shares), will participate in any vote
to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any
manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation
which govern our pre-initial business combination behavior more easily than some other blank check companies, and this may increase
our ability to complete an initial business combination with which you do not agree. Our stockholders may pursue remedies against
us for any breach of our amended and restated certificate of incorporation.
Our sponsor, officers
and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and
restated certificate of incorporation (i) to modify the substance or timing of our obligation to redeem 100% of our public shares
if we do not complete our initial business combination by April 9, 2020 or (ii) with respect to any other provision relating to
stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity
to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public shares. These agreements
are contained in a letter agreement that we have entered into with our sponsor, officers and directors. Our stockholders are not
parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against
our sponsor, officers or directors for any breach of these agreements. As a result, in the event of a breach, our stockholders
would need to pursue a stockholder derivative action, subject to applicable law.
We may be unable to obtain additional
financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel
us to restructure or abandon a particular business combination.
We intend to target
businesses larger than we could acquire with the net proceeds of our initial public offering and the sale of the placement units.
As a result, we may be required to seek additional financing to complete such proposed initial business combination. We cannot
assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves
to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction
or abandon that particular business combination and seek an alternative target business candidate. Further, the amount of additional
financing we may be required to obtain could increase as a result of future growth capital needs for any particular transaction,
the depletion of the available net proceeds in search of a target business, the obligation to repurchase for cash a significant
number of shares from stockholders who elect redemption in connection with our initial business combination and/or the terms of
negotiated transactions to purchase shares in connection with our initial business combination. If we are unable to complete our
initial business combination, our public stockholders may receive only approximately $10.00 per share plus any pro rata interest
earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes on the liquidation
of our trust account and our warrants will expire worthless. In addition, even if we do not need additional financing to complete
our initial business combination, we may require such financing to fund the operations or growth of the target business. The failure
to secure additional financing could have a material adverse effect on the continued development or growth of the target business.
None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial
business combination. If we are unable to complete our initial business combination, our public stockholders may only receive approximately
$10.00 per share on the liquidation of our trust account, and our warrants will expire worthless.
Our initial stockholders may exert a
substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholders
own shares representing approximately 21.8% of our issued and outstanding shares of common stock (including the private placement
shares). Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that
you do not support, including amendments to our amended and restated certificate of incorporation and approval of major corporate
transactions. If our initial stockholders any additional shares of common stock in the aftermarket or in privately negotiated transactions,
this would increase their control. Factors that would be considered in making such additional purchases would include consideration
of the current trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our
initial stockholders, is and will be divided into three classes, each of which will generally serve for a term of three years with
only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors
prior to the completion of our initial business combination, in which case all of the current directors will continue in office
until at least the completion of the initial business combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because
of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will
continue to exert control at least until the completion of our initial business combination.
Our initial stockholders will receive
additional shares of Class A common stock if we issue shares to consummate an initial business combination.
The founder shares
will automatically convert into Class A common stock at the time of our initial business combination, or earlier at the option
of the holders, on a one-for-one basis, subject to adjustment as provided herein. In the case that additional shares of Class A
common stock, or equity-linked securities convertible or exercisable for Class A common stock, are issued or deemed issued in excess
of the amounts offered in this Report and related to the closing of the initial business combination, the ratio at which founder
shares shall convert into Class A common stock will be adjusted so that the number of Class A common stock issuable upon conversion
of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of all outstanding shares
of common stock upon completion of the initial business combination, excluding any shares or equity-linked securities issued, or
to be issued, to any seller in the business combination and any private placement-equivalent warrants issued to our sponsor or
its affiliates upon conversion of loans made to us. Additionally, the aforementioned adjustment will not take into account any
shares of Class A common stock redeemed in connection with the business combination. Accordingly, the holders of the founder shares
could receive additional shares of Class A common stock even if the additional shares of Class A common stock, or equity-linked
securities convertible or exercisable for Class A common stock, are issued or deemed issued solely to replace those shares that
were redeemed in connection with the business combination. The foregoing may make it more difficult and expensive for us to consummate
an initial business combination.
We may amend the terms of the warrants
in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 65% of the then outstanding
public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and
the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants are issued
in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us.
The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity
or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding public warrants
to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend
the terms of the public warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding public warrants
approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 65% of the
then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase
the exercise price of the warrants, convert the warrants into cash or stock, shorten the exercise period or decrease the number
of shares of our Class A common stock purchasable upon exercise of a warrant.
We may redeem your unexpired warrants
prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability
to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01
per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day
period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain
other conditions are met. If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance
of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state
blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify
such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants were offered
by us in our initial public offering. Redemption of the outstanding warrants could force you (i) to exercise your warrants and
pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current
market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the
time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants.
None of the placement warrants will be redeemable by us so long as they are held by the sponsor or its permitted transferees.
Our warrants and founder shares may
have an adverse effect on the market price of our Class A common stock and make it more difficult to effectuate our initial business
combination.
We issued warrants
to purchase 11,000,000 shares of our Class A common stock as part of the units offered in our initial public offering and an aggregate
of 320,000 placement warrants. Our initial stockholders currently own an aggregate of 5,200,000 founder shares. The founder shares
are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment as set forth herein. In addition,
if our sponsor makes any working capital loans, up to $1,500,000 of such loans may be convertible into units, at a price of
$10.00 per unit at the option of the lender. The units would be identical to the placement units. To the extent we issue shares
of Class A common stock to effectuate an initial business combination, the potential for the issuance of a substantial number of
additional shares of Class A common stock upon exercise of these warrants and conversion rights could make us a less attractive
business combination vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares
of our Class A common stock and reduce the value of the shares of Class A common stock issued to complete the initial business
combination. Therefore, our warrants and founder shares may make it more difficult to effectuate an initial business combination
or increase the cost of acquiring the target business.
The placement warrants
included in the placement units are identical to the warrants sold as part of the units in our initial public offering except that,
so long as they are held by our sponsor or its permitted transferees, (i) they will not be redeemable by us, (ii) they (including
the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred,
assigned or sold by our sponsor until 30 days after the completion of our initial business combination and (iii) they may be exercised
by the holders on a cashless basis.
A market for our securities may not
develop, which would adversely affect the liquidity and price of our securities.
The price of our securities
may vary significantly due to one or more potential business combinations and general market or economic conditions. Furthermore,
an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell
your securities unless a market can be established and sustained.
Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.
The federal proxy
rules require that a proxy statement with respect to a vote on an initial business combination meeting certain financial significance
tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial
statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules.
These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally
accepted in the United States of America, or GAAP, or international financial reporting standards as issued by the International
Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to
be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial
statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide
such financial statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial
business combination within the prescribed time frame.
We are an emerging growth company within
the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging
growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance
with other public companies.
We are an “emerging
growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier,
including if the market value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before
that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether
investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities
less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise
would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out
of such extended transition period, which means that when a standard is issued or revised and it has different application dates
for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accountant standards used.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management
resources, and increase the time and costs of completing an initial business combination.
Section 404 of the
Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with this Annual Report on
Form 10-K as long as we maintain our status as an emerging growth company, we will not be required to comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are
a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared
to other public companies because a target company with which we seek to complete our initial business combination may not be in
compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal
control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete
any such business combination.
Provisions in our amended and restated
certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing
to pay in the future for our Class A common stock and could entrench management.
Our amended and restated
certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider
to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors
to designate the terms of and issue new series of preferred shares, which may make the removal of management more difficult and
may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject
to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may
make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium
over prevailing market prices for our securities.
U.S. federal income tax reform could
adversely affect us and holders of our units.
On December 22, 2017,
President Trump signed into law H.R. 1, originally known as the “Tax Cuts and Jobs Act,” which significantly reformed
the Internal Revenue Code of 1986, as amended. The new legislation, among other things, changes the U.S. federal tax rates, imposes
significant additional limitations on the deductibility of interest, allows the expensing of capital expenditures, and puts into
effect the migration from a “worldwide” system of taxation to a territorial system. We continue to examine the impact
this tax reform legislation may have on us. The impact of this tax reform, or of any future administrative guidance interpreting
provisions thereof, on holders of our units is uncertain and could be adverse. We urge prospective investors to consult with their
legal and tax advisors with respect to any such legislation and the potential tax consequences of investing in our units.
Provisions in our amended and restated
certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated
certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions
against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court
of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing such suit will be deemed to
have consented to service of process on such stockholder’s counsel. This provision may have the effect of discouraging lawsuits
against our directors and officers.
Cyber incidents or attacks directed
at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital
technologies, including information systems, infrastructure and cloud applications and services, including those of third parties
with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the
systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.
If we effect our initial business combination
with a company with operations or opportunities outside of the United States, we would be subject to a variety of additional risks
that may negatively impact our operations.
If we effect our initial
business combination with a company with operations or opportunities outside of the United States, we would be subject to any special
considerations or risks associated with companies operating in an international setting, including any of the following:
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higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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longer payment cycles and challenges in collecting accounts receivable;
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tax issues, including but not limited to tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration of political relations with the United States; and
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government appropriations of assets.
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We may not be able
to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may adversely impact
our results of operations and financial condition.
There are risks related to the technology
industry to which we may be subject.
Business combinations
with companies with operations in the technology industry entail special considerations and risks. If we are successful in completing
a business combination with a target business with operations in the technology industry, we will be subject to, and possibly adversely
affected by, the following risks, including but not limited to:
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if we do not develop successful new products or improve existing ones, our business will suffer;
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we may invest in new lines of business that could fail to attract or retain users or generate revenue;
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we will face significant competition and if we are not able to maintain or improve our market share, our business could suffer;
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disruption or failure of our networks, systems, platform or technology that frustrate or thwart our users’ ability to access our products and services, may cause our users, advertisers, and partners to cut back on or stop using our products and services altogether, which could seriously harm our business;
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mobile malware, viruses, hacking and phishing attacks, spamming, and improper or illegal use of our products could seriously harm our business and reputation;
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if we are unable to successfully grow our user base and further monetize our products, our business will suffer;
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if we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished, and our business may be seriously harmed;
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we may be subject to regulatory investigations and proceedings in the future, which could cause us to incur substantial costs or require us to change our business practices in a way that could seriously harm our business; and
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components used in our products may fail as a result of a manufacturing, design, or other defect over which we have no control, and render our devices inoperable.
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Any of the foregoing
could have an adverse impact on our operations following a business combination. However, our efforts in identifying prospective
target businesses are not limited to the technology industry. Accordingly, if we acquire a target business in another industry,
these risks will likely not affect us and we will be subject to other risks attendant with the specific industry in which we operate
or target business which we acquire, none of which can be presently ascertained.