ITEM 1. BUSINESS
In this Annual
Report on Form 10-K (the “Form 10-K”), references to the “Company” and to “we,” “us,”
and “our” refer to Collective Growth Corporation.
Overview
We are a blank check
company formed under the laws of the State of Delaware on December 10, 2019 for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses.
Initial Public Offering
On May 5, 2020, we
consummated our Initial Public Offering (“IPO”) of 15,000,000 Units at a price of $10.00 per Unit, generating gross
proceeds of $150,000,000. Simultaneously with the closing of the IPO, we consummated the sale of 262,500 units (“Private
Placement Units”) at a price of $10.00 per Private Placement Unit and the sale of 1,875,000 warrants (“Private Placement
Warrants” and together with the Private Placement Units, the “Private Placement Securities”) at a price of $1.00
per Private Placement Warrant in a private placement, generating gross proceeds of $4,500,000.
Following the IPO
and the sale of the Private Placement Securities, a total of $150,000,000 was placed in a trust account for the benefit of our
public stockholders and we had $840,854 of cash held outside of the trust account, after payment of costs related to IPO, and
available for working capital purposes. We incurred $8,737,297 in transaction costs, including $3,000,000 of underwriting fees,
$5,250,000 of deferred underwriting fees and $487,297 of other offering costs.
As of December 31,
2020, we had marketable securities held in the trust account of $150,100,083 (including interest income) consisting of U.S. Treasury
Bills with a maturity of 180 days or less. Interest income on the balance in the trust account may be used by us to pay taxes.
Through December 31, 2020, we did not withdraw any interest earned on the trust account to pay our taxes.
For the year ended December
31, 2020, cash used in operating activities was $753,025. Net loss of $1,034,535 was affected by interest earned on marketable securities
held in the trust account of $94,642, an unrealized gain on marketable securities held in our trust account of $5,441 and a deferred
consulting fee payable of $72,000. Changes in operating assets and liabilities provided $309,593 of cash for operating activities.
We intend to use substantially
all of the funds held in the Trust Account, including any amounts representing interest earned on the trust account (less income
taxes payable and deferred underwriting commissions) to complete our business combination. We may withdraw interest to pay taxes.
To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our business combination,
the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business
or businesses, make other acquisitions and pursue our growth strategies.
Recent Developments
On December 10, 2020,
we entered into a Business Combination Agreement (“Business Combination Agreement”) with Innoviz Technologies Ltd.
(“Innoviz”), Hatzata Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Innoviz (“Merger
Sub”), Perception Capital Partners LLC, a Delaware limited liability company (“Perception”) and Antara Capital
LP, a Delaware limited partnership (“Antara”) (in the case of Perception and Antara, only for specific limited purposes
as set forth in the Business Combination Agreement.
Pursuant to the Business
Combination Agreement, and subject to shareholder approval, Merger Sub will merge with and into our company, with our company
surviving the merger (the “Merger”). As a result of the Merger, and upon consummation of the Merger and the other
transactions contemplated by the Business Combination Agreement (“Transactions”), we will become a wholly-owned subsidiary
of Innoviz, with our stockholders becoming securityholders of Innoviz.
Innoviz is a leading
provider of high-performance, solid-state LiDAR and perception solutions that bring enhanced vision and superior performance to
enable safe autonomous driving at a mass scale. We believe that Innoviz provides a complete and comprehensive solution for automotive
original equipment manufacturers and Tier-1 partners that are developing and marketing autonomous driving vehicles to the passenger
car and other relevant markets, such as robotaxis, shuttles and trucking. Innoviz’s unique LiDAR and perception solutions,
which feature technological breakthroughs across core components, have propelled Innoviz to the first Level 3 LiDAR Automotive
series production contract in its industry. In addition, Innoviz’s solutions can enable safe autonomy for other industries,
including drones, robotics and mapping.
On March 31, 2021, the Company
held a special meeting of stockholders, pursuant to which the Company’s stockholders approved, among others, a proposal to
approve and adopt the Business Combination Agreement and Merger. The number of holders of the Company’s Class A common stock exercising
their redemption rights in connection with this vote did not result in the Company having less than $5,000,001 of net tangible assets
after giving effect to all holders of public shares that redeemed their shares for cash. Holders of 891,046 shares of the Company’s
Class A common stock elected to redeem their shares. Assuming no holder chooses to reverse their redemption election, the amount that
will be paid out to redeem such shares will be approximately $8.9 million based on the amount held in trust on March 31, 2021.
The transaction is expected to close promptly after confirmation all closing conditions have been satisfied. Upon completion
of the transaction, the combined company will retain the Innoviz Technologies Ltd. name and its ordinary shares are expected to be
listed on the Nasdaq Stock Market under the ticker symbol “INVZ”.
The Transactions are
expected to be consummated shortly after the filing of this Annual Report on Form 10-K, after the fulfillment of certain other
conditions.
Further information
regarding Innoviz and the Transactions is set forth in our definitive proxy statement that was filed with the SEC on March 11,
2021. Investors may read such filing by going to the SEC website at www.sec.gov.
Other than as specifically
discussed, the disclosures in this Annual Report on Form 10-K assume the closing of the Transactions will not occur for whatever
reason and that we will be forced to search for another target business with which to consummate an initial business combination.
Effecting Our Initial Business Combination
We are not presently
engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial business
combination using cash from the proceeds of our IPO and the private placement of the private placement securities, the proceeds
of the sale of our shares in connection with our initial business combination, 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 IPO and the sale of the private placement securities, 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. At this time, we are not a party to any arrangement or understanding with any third party with
respect to raising any additional funds through the sale of securities or otherwise.
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.
While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business
acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s
fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms
of the transaction. 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 finders’ fees is customarily tied to completion
of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will
our sponsor or any of our existing officers or directors, or any entity with which our sponsor or officers are affiliated, be
paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by
the company prior to, or in connection with any services rendered for any services they render in order to effectuate, the completion
of our initial business combination (regardless of the type of transaction that it is). Although none of our sponsor, executive
officers or directors, or any of their respective affiliates, are allowed to receive any compensation, finder’s fees or
consulting fees from a prospective business combination target in connection with a contemplated initial business combination,
we do not have a policy that prohibits our sponsor, executive officers or directors, or any of their respective affiliates, from
negotiating for the reimbursement of out-of-pocket expenses by a target business.
We pay Ocelot Capital
Management LLC, an affiliate of certain of our officers and directors, a total of $10,000 per month for office space, utilities
and secretarial and administrative support and to reimburse our sponsor for any out-of-pocket expenses related to identifying,
investigating and completing an initial business combination. Some of our officers and directors and advisors 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, directors or advisors
or making the initial business combination through a joint venture or other form of shared ownership with our sponsor, officers
or directors. While Innoviz is not affiliated with our sponsor, officers, advisors, or directors, in the event we do not consummate
the Innoviz Transactions described above and we seek to complete our initial business combination with a target that is affiliated
with our sponsor, officers, directors or advisors, we, or a committee of independent directors, would obtain an opinion from an
independent investment banking firm or from another independent entity that commonly renders valuation opinions that such an initial
business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any
other context.
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 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 deferred underwriting commissions and taxes payable on the interest earned on
the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. If 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. The fair market value of our initial business combination
will be determined by our board of directors based upon one or more standards generally accepted by the financial community, such
as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses or a valuation based
on the financial metrics of M&A transactions of comparable businesses. If our board of directors is not able to independently
determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment
banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria.
While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market
value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of
a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects.
Notwithstanding the foregoing, if we are not then listed on the Nasdaq for whatever reason, we would no longer be required to
meet the foregoing 80% fair market value test.
Subject to this fair
market value requirement, our management has virtually unrestricted flexibility in identifying and selecting one or more prospective
target businesses. We anticipate structuring our initial business combination 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 less than 100% of such interests or assets of the target business in order to meet certain objectives of the
target management team or stockholders. However, we will only complete an initial business combination if the post-transaction company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in
the target sufficient for it not to be required to register as an investment company under the Investment Company Act. 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.
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 have closely
scrutinized the management of a prospective target business, including the management of Innoviz, when evaluating the desirability
of effecting our initial business combination with that business, and plan to continue to do so if the Innoviz Transaction is
not consummated and we seek other business combination opportunities, our assessment of the target business’ management
may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or abilities
to manage a public company. Furthermore, the future role of members of our management team, if any, in the target business cannot
presently be stated with any certainty. The determination as to whether any of the members of our management team will remain
with the combined company will be made at the time of our initial business combination. While it is possible that one or more
of our directors will remain associated in some capacity with us following our initial business combination, 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.
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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 is required for our initial business combination if:
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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;
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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, advisors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers,
directors, advisors 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. Additionally, our sponsor, officers, directors, advisors 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 taxes, divided by the number of then
outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated
to be approximately $10.00 per public share. The per-share amount we will distribute to investors who properly redeem their
shares will not be reduced by the deferred underwriting commissions we will pay to Cantor Fitzgerald & Co (“Cantor”).
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, private placement shares and any public shares held by them in connection
with the completion of our initial business combination. Cantor will have the same redemption rights as public stockholders with
respect to any public shares it acquires.
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 will be 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 will only
redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriter’s 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 agreements, our sponsor, officers and directors have agreed to vote their founder shares, private placement
shares and any public shares purchased during or after our IPO (including in open market and privately negotiated transactions)
in favor of our initial business combination. Cantor has not committed to vote any shares held by them 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. We intend to give approximately
30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which
a vote shall be taken to approve our initial business combination. These quorum and voting thresholds, and the voting agreements
of our initial stockholders, may make it more likely that we will consummate our initial business combination. Each public stockholder
may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction. Our amended and
restated certificate of incorporation provides that we will only redeem our public shares so long as (after such redemption) our
net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination
and after payment of underwriter’s 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 IPO, which we refer to as the “Excess
Shares.” Such restriction shall also be applicable to our affiliates. Absent this provision, a public stockholder holding
more than an aggregate of 15% of the shares sold in our IPO 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 more than 15% of the shares sold in our IPO 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 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, prior
to a date set forth in the proxy materials mailed to such holders. Accordingly, a public stockholder would have from the time
we send out our proxy materials until the date set forth in such proxy materials to tender its shares if it wishes to seek to
exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic
delivery of their public shares.
There is a nominal
cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through
the DWAC System. The transfer agent will typically charge the tendering broker such nominal amount and it would be up to the broker
whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not
we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of
exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different
from the procedures used historically by many blank check companies. In order to perfect redemption rights in connection with
their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an
initial business combination, and a holder could simply vote against a proposed initial business combination and check a box on
the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the initial business combination
was approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify
ownership. As a result, the stockholder then had an “option window” after the completion of the initial business combination
during which he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption
price, he or she could sell his or her shares in the open market before actually delivering his or her shares to the company for
cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder
meeting, would become “option” rights surviving past the completion of the initial business combination until the
redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that
a redeeming holder’s election to redeem is irrevocable once the initial business combination is approved.
Any request to redeem
such shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials. Furthermore, if a holder
of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior
to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the
certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares
electing to redeem their shares will be distributed promptly after the completion of our initial business combination.
If our initial business
combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption
rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will
promptly return any certificates delivered by public holders who elected to redeem their shares.
If our proposed initial
business combination is not completed, we may continue to try to complete an initial business combination with a different target
until November 5, 2021.
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 November 5, 2021 to complete our initial business combination.
If we are unable to complete 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 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 the case of clauses (ii) and (iii)
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 November 5, 2021.
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 or private placement shares held by them if we fail to complete our
initial business combination by November 5, 2021. However, if our sponsor, officers or directors acquired public shares in or
after our IPO, they will be entitled to liquidating distributions from the trust account with respect to such public shares if
we fail to complete our initial business combination within the allotted time period. Cantor will have the same redemption rights
as public stockholders with respect to any public shares it acquires.
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 offer redemption rights in connection
with any proposed initial business combination or to redeem 100% of our public shares if we do not complete our initial business
combination by November 5, 2021 or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business
combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common
stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay
our taxes divided by the number of then outstanding public shares. However, we will only redeem our public shares so long as (after
such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial
business combination and after payment of underwriter’s fees and commissions (so that we are not subject to the SEC’s
“penny stock” rules). If this optional redemption right is exercised with respect to an excessive number of public
shares such that we cannot satisfy the net tangible asset requirement (described above), we would not proceed with the amendment
or the related redemption of our public shares at such time.
If we do not consummate
the proposed business combination with Innoviz or any other initial business combination by the deadline set forth in our amended
and restated certificate of incorporation, we expect that all costs and expenses associated with implementing our plan of dissolution,
as well as payments to creditors, will be funded from amounts remaining out of the approximately $284,330 of proceeds held outside
the trust account (as of December 31, 2020), although we cannot assure you that there will be sufficient funds for such purpose.
We will depend on sufficient interest being earned on the proceeds held in the trust account to pay any tax obligations we may
owe. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution,
to the extent that there is any interest accrued in the trust account not required to pay taxes on interest income earned on the
trust account balance, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest
to pay those costs and expenses.
If we were to expend
all of the net proceeds of our IPO and the sale of the private placement securities, 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 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. Marcum LLP, our independent registered public accounting firm, and the underwriter of our
IPO did 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 underwriter of
our IPO 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 believe
it is unlikely that our sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us
for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the trust
account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as
of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount
of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification obligations
or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether
to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent
directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible
that our independent directors in exercising their business judgment may choose not to do so if, for example, the cost of such
legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors
determine that a favorable outcome is not likely. We have not asked our sponsor to reserve for such indemnification obligations
and we cannot assure you that our sponsor would be able to satisfy those obligations. Accordingly, we cannot assure you that due
to claims of creditors the actual value of the per-share redemption price will not be less than $10.00 per public share.
We seek to reduce
the possibility that our sponsor has to indemnify the trust account due to claims of creditors by endeavoring to have all vendors,
service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable
as to any claims under our indemnity of the underwriter of our IPO against certain liabilities, including liabilities under the
Securities Act. We have access to up to approximately $284,330 of the proceeds of our IPO held outside the trust account (as of
December 31, 2020) 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. In the event that we liquidate and it is subsequently determined that the reserve for claims and
liabilities is insufficient, stockholders who received funds form our trust accounts 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 November 5, 2021 may be considered a liquidating distribution under
Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that
it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims
can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an
additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or
the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of
the dissolution.
Furthermore, if the
pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination by November 5, 2021 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 November 5, 2021,
we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released
to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right
to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following November 5, 2021 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 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. As described above, pursuant to the obligation contained
in our underwriting agreement, we will 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 underwriter of our IPO against certain liabilities, including liabilities
under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor
will not be responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy
petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account
could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third
parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition
or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could
be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent
conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore,
our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith,
thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior
to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders
will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion of our initial
business combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend
any provisions of our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation
to offer redemption rights in connection with any proposed initial business combination or to redeem 100% of our public shares
if we do not complete our initial business combination by November 5, 2021 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 by November 5, 2021, subject to applicable law. Stockholders who do not exercise
their redemption rights in connection with an amendment to our certificate of incorporation would still be able to exercise their
redemption rights in connection with a subsequent business combination. In no other circumstances will a stockholder have any
right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial
business combination, a stockholder’s voting in connection with the initial business combination alone will not result in
a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must
have also exercised its redemption rights as described above. These provisions of our amended and restated certificate of incorporation,
like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote.
Competition
In identifying, evaluating,
and selecting a target business for our initial business combination, such as Innoviz, we have encountered, and continue to encounter,
competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups
and leveraged buyout funds, and operating businesses seeking strategic business combinations. Many of these entities are well established
and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these
competitors possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses
will be 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.
Facilities
Our executive offices
are located at 1805 West Avenue, Austin, Texas 78701 and our telephone number is (512) 358-9085. Our executive offices are provided
to us by our sponsor. We pay Ocelot Capital Management LLC, an affiliate of certain of our officers and directors, a total of
$10,000 per month for office space, utilities and secretarial and administrative support. We consider our current office space
adequate for our current operations.
Employees
We currently have
four officers. These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote
as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount
of time they will devote in any time period will vary based on whether a target business has been selected for our initial business
combination and the stage of the initial business combination process we are in. We do not intend to have any full-time employees
prior to the completion of our initial business combination.
Periodic Reporting
and Financial and Other Information
Our units, Class A
common stock, and public warrants are registered under the Exchange Act and we have reporting obligations, including the requirement
that we file annual, quarterly, and current reports with the SEC. In accordance with the requirements of the Exchange Act, this
Report contains financial statements audited and reported on by our independent registered public accountants.
We will provide stockholders
with audited financial statements of the prospective target business, such as Innoviz, as part of the tender offer materials or
proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these financial
statements will need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the
historical financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement
requirements may limit the pool of potential targets we may conduct an initial business combination with because some targets
may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and
complete our initial business combination within the prescribed time frame. We cannot assure you that any particular target business
identified by us as a potential business combination candidate will have financial statements prepared in accordance with GAAP
or that the potential target business will be able to prepare its financial statements in accordance with the requirements outlined
above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business. While
this may limit the pool of potential business combination candidates, we do not believe that this limitation will be material.
We are required to
evaluate our internal control procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley Act.
Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging
growth company, will we be required to have our internal control procedures audited. A target company may not be in compliance
with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal
controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to
complete any such business combination.
We 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 our IPO, (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.
We will remain an
emerging growth company until the earlier of (1) the last day of the fiscal year (a) following May 5, 2025, (b) in which we have
total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which
means the market value of our shares of Class A common stock that are held by non-affiliates exceeds $700 million as
of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt
during the prior three-year period.
ITEM 1A. RISK FACTORS
You should carefully
consider all of the following risk factors and all of 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.
In addition to
the risks and uncertainties set forth below, we face certain material risks and uncertainties related to the Transactions with
Innoviz. If we succeed in effecting the Transactions with Innoviz, we will face additional and different risks and uncertainties
related to the business of Innoviz. Such material risks are set forth in our Definitive Proxy Statement filed with the SEC. Investors
are urged to read such Definitive Proxy Statement for information relating to the risks related to the Transactions and Innoviz.
The risks presented
below assumes that we will not consummate the Transactions with Innoviz and then seek to find an alternative target with which
to consummate and initial business combination.
Summary Risk Factors
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Your only opportunity to affect the investment decision
regarding a potential business combination may be limited to the exercise of your right to convert your shares to cash.
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Our initial stockholders and management team will
control a substantial interest in us and thus may influence certain actions requiring a stockholder vote.
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The ability of our public stockholders to convert
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 agreement for an initial business combination or optimize our capital structure. If our initial
business combination is unsuccessful you would have to wait for liquidation in order to redeem your shares.
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We may not be able to complete our initial business
combination by November 5, 2021, in which case we would cease all operations except for the purpose of winding up, and we would
redeem our public shares for a pro rata portion of the funds in the trust account, and we would liquidate. In such event, our
warrants would expire worthless.
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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 convert all such shares in excess
of 15% of our Class A common stock.
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We are not required to obtain an opinion from an independent
investment banking firm or another independent valuation or appraisal firm and, consequently, you may have no assurance from an
independent source that the price we are paying for the target(s) of our initial business combination is fair from a financial
point of view.
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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.
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We may issue additional shares of capital stock or
debt securities to complete a business combination, which would reduce the equity interest of our stockholders.
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Resources could be wasted in researching acquisitions
that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another
business.
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We may be unable to obtain additional financing, if
required, to complete a business combination or to fund the operations and growth of the target business.
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Our search for a business combination, and any target
business with which we ultimately consummate a business combination, may be materially adversely affected by the COVID-19 pandemic
and other events, and the status of debt and equity markets.
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As the number of special purpose acquisition companies
evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets.
This could increase the cost of our initial business combination and could even result in our inability to find a target or to
consummate an initial business combination
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Changes in the market for directors and officers liability
insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination
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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.
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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.
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If we consummate a business combination with a target
company with assets located outside of the United States, our results of operations and prospects could be subject to the economic,
political, and legal policies, developments, and conditions in the country in which we operate. Further, exchange rate fluctuations
and currency policies may cause our ability to succeed in the international markets to be diminished.
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Past performance by our management team and their
affiliates may not be indicative of future performance of an investment in our company.
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Our sponsor, executive officers and directors presently
have fiduciary or contractual obligations to other entities and, accordingly, may have conflicts of interest in determining to
which entity a particular business opportunity should be presented.
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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 a majority of the then outstanding public
warrants.
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We may redeem your unexpired warrants prior to their
exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
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Nasdaq may delist our securities from trading on its
exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading
restrictions.
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If third parties bring claims against us, and if our
directors decide not to enforce the indemnification obligations of our sponsor, or if our sponsor does not have the funds to indemnify
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.
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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
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We may redeem your unexpired warrants prior to their
exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
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The securities in which we invest the funds held in
the trust account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the
per-share redemption amount received by public stockholders may be less than $10.00 per share.
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We have no operating history and no revenues, and
you have no basis on which to evaluate our ability to achieve our business objective.
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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.
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Provisions in our amended and restated certificate
of incorporation and bylaws 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 common stock and could entrench management.
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Provisions in our amended and restated certificate
of incorporation provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain
stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes
with us or our directors, officers, employees or stockholders.
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We may not have sufficient funds to consummate a business
combination.
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If Collective Growth’s stockholders fail to
properly demand conversion rights, they will not be entitled to convert their Collective Growth Common Stock into a pro rata portion
of the trust account.
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The exercise of Collective Growth’s directors’
and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict
of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate
and in Collective Growth’s stockholders’ best interest.
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The Collective Growth board of directors did not obtain
a third-party fairness opinion in determining whether or not to proceed with the Business Combination.
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Collective Growth’s stockholders will have a
reduced ownership and voting interest after consummation of the Business Combination and will exercise less influence over management.
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Collective Growth will incur significant transaction
and transition costs in connection with a business combination.
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Cyber incidents or attacks directed at us could result
in information theft, data corruption, operational disruption and/or financial loss.
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Risks Related to
our Business and Corporate Structure
We are a blank
check company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our
business objective.
We are a blank check
company 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. If we fail
to complete our initial business combination, we will never generate any operating revenues.
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 sponsor, officers and directors have agreed to vote in favor of such initial
business combination, regardless of how our public stockholders vote.
Pursuant to the letter
agreement, our sponsor, officers and directors have agreed to vote their founder shares, private placement shares as well as any
public shares purchased during or after our IPO (including in open market and privately negotiated transactions), in favor of
our initial business combination. Our initial stockholders own shares representing approximately 20.7% of our outstanding shares
of common stock. Accordingly, if we seek stockholder approval of our initial business combination, the agreement by our initial
stockholders to vote in favor of our initial business combination will increase the likelihood that we will receive the requisite
stockholder approval for such initial business combination.
Your only opportunity
to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to
redeem your shares from us for cash, unless we seek stockholder approval of the initial business combination.
At the time of your
investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our initial business
combination. Since our board of directors may complete 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,
we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 as
described above upon consummation of our initial business combination and after payment of underwriter’s fees and commissions
(so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. Consequently, if accepting all properly
submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary
to satisfy a closing condition, each as described above, we would not proceed with such redemption and the related business combination
and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may
be reluctant to enter into an initial business combination with us.
The ability of
our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable business combination or optimize our capital structure.
At the time we enter
into an agreement for our initial business combination, 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 results in the issuance of Class A shares on a
greater than one-to-one basis upon conversion of the Class B common stock at the time of our business combination. The above
considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital
structure. The amount of the deferred underwriting commissions payable to Cantor 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 November 5, 2021. 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 November 5, 2021. 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 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 the case of clauses (ii) and (iii)
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 warrantholders for approval in connection with our initial business combination. Any such purchases of our securities may
result in the completion of our initial business combination that may not otherwise have been possible. Any such purchases will
be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting
requirements.
In addition, if such
purchases are made, the public “float” of our Class A common stock or public warrants and the number of beneficial
holders of our securities may be reduced, possibly making it difficult to 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, in the event
we distribute proxy materials, 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
or to deliver their shares to the transfer agent electronically up to two business days prior to the vote on the proposal to approve
the initial business combination. 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 offer redemption rights in connection with any proposed initial business combination or to redeem
100% of our public shares if we do not complete our initial business combination by November 5, 2021 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 November 5, 2021, subject to applicable law
and as further described herein. Stockholders who do not exercise their redemption rights in connection with an amendment to our
certificate of incorporation would still be able to exercise their redemption rights in connection with a subsequent business
combination. 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 units, Class A
common stock, and warrants are currently listed on Nasdaq. However, we cannot assure you that our securities will continue to
be listed on Nasdaq in the future or prior to our initial business combination. In order to continue listing our securities on
Nasdaq prior to our initial business combination, we must maintain certain financial, distribution, and stock price levels. Generally,
we must maintain a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our
securities (generally 300 round-lot holders with at least 50% of such round lot holders holding securities with a market value
of at least $2,500). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance
with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements,
in order to continue to maintain the listing of our securities on Nasdaq. For instance, our stock price would generally be required
to be at least $4.00 per share, our stockholders’ equity would generally be required to be at least $5.0 million, and we
would be required to have a minimum of 300 round lot holders (with at least 50% of such round lot holders holding securities with
a market value of at least $2,500) of our securities. We cannot assure ou 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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limited amount of news and analyst coverage; and
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a
decreased ability to issue additional securities or obtain additional financing in the
future.
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The National Securities
Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain
securities, which are referred to as “covered securities.” Because we expect that our units and eventually our Class
A common stock and warrants will be listed on Nasdaq, our units, Class A common stock and warrants will be 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. 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 IPO and the
sale of the private placement securities 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 will have net tangible assets in excess of $5,000,000, we are exempt from rules promulgated by the SEC to
protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or
protections of those rules. Among other things, this means that we have a longer period of time to complete our business combination
than do companies subject to Rule 419. Moreover, if our IPO were subject to Rule 419, that rule would prohibit the release of
any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to
us in connection with our completion of an initial business combination.
If we seek stockholder approval of our initial business
combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders
are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares in excess
of 15% of our Class A common stock.
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together
with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than
an aggregate of 15% of the shares sold in our IPO 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 expect to encounter competition
from other entities having a business objective similar to ours, including private investors (which may be individuals or investment
partnerships), other blank check companies and other entities competing for the types of businesses we intend to acquire. Many of these
individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly,
acquisitions of companies operating in or providing services to various industries. Many of these competitors possess similar technical,
human and other resources to ours, and our financial resources will be relatively limited when contrasted with those of many of these
competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of our IPO and
the sale of the private placement securities, our ability to compete with respect to the acquisition of certain target businesses that
are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing
the acquisition of certain target businesses. Furthermore, 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 IPO and the sale of the private
placement securities not being held in the trust account are insufficient, it could limit the amount available to fund our search
for a target business or businesses and complete our initial business combination and we will depend on loans from our sponsor
or management team to fund our search for an initial business combination, to pay our taxes and to complete our initial business
combination. If we are unable to obtain these loans, we may be unable to complete our initial business combination.
Of the net proceeds of our IPO and the
sale of the private placement securities, only approximately $284,330 (as of December 31, 2020) 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 $750,000 of such loans may be convertible into units at a price of $10.00 per unit
and up to $750,000 of such loans may be convertible into warrants at a price of $1.00 per warrant, in each case at the option
of the lender. These units and warrants would be identical to the private placement units and private placement warrants, respectively.
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 or officers or directors 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 will seek to have all vendors, service providers,
prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties
may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against
the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims,
as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim
against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving
such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to
it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third
party’s engagement would be significantly more beneficial to us than any alternative. Marcum LLP, our independent registered
public accounting firm, and the underwriter of the offering will not execute agreements with us waiving such claims to the monies
held in the trust account.
Examples of possible instances where we
may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to
execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there
is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption
of our public shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the
exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment
of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly,
the per-share redemption amount received by public stockholders could be less than the $10.00 per share initially held in
the trust account, due to claims of such creditors. Pursuant to the 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 underwriter of our IPO
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 believe it
is unlikely that our sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for
claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce the indemnification
obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to
our public stockholders.
In the event that
the proceeds in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per share
held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions
in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts
that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our
independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While we currently
expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary
duties may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent
directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome
is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the
trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
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. An investment in our securities is not intended for persons who are seeking
a return on investments in government securities or investment securities. The trust account is intended as a holding place for
funds pending the earliest to occur of: (i) the completion of our initial business combination; (ii) the redemption of any public
shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation
(A) to modify the substance or timing of our obligation to offer redemption rights in connection with any proposed initial business
combination or to redeem 100% of our public shares if we do not complete our initial business combination by November 5, 2021
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 November 5, 2021, our return of the funds held in the trust account to our
public stockholders as part of our redemption of the public shares. Stockholders who do not exercise their redemption rights in
connection with an amendment to our certificate of incorporation would still be able to exercise their redemption rights in connection
with a subsequent business combination. 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 will be required to comply with certain
SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming
and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes
could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply
with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including
our ability to negotiate and complete our initial business combination and results of operations.
Our stockholders
may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their
shares.
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the
event we do not complete our initial business combination by November 5, 2021 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 November 5,
2021 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 November 5, 2021 is not
considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially
due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then
pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful
redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of stockholders until
after the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors.
In accordance with Nasdaq corporate governance
requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following
our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for
the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such
a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business
combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore,
if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may
attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c)
of the DGCL.
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 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. There may be a circumstance where an exemption from registration
exists for holders of our private placement warrants to exercise their warrants while a corresponding exemption does not exist
for holders of the warrants included as part of units sold in our IPO. In such an instance, our sponsor and its transferees (which
may include our directors and executive officers) would be able to sell the common stock underlying their warrants while holders
of our public warrants would not be able to exercise their warrants and sell the underlying common stock. 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 IPO. However, there may be instances in which holders of our public warrants may
be unable to exercise such public warrants but holders of our private placement warrants may be able to exercise such private
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 an agreement
entered into concurrently with the issuance and sale of the securities in our IPO, our initial stockholders and Cantor and their
respective permitted transferees can demand that we register the private placement securities, the shares of Class A common stock
issuable upon conversion of the founder shares and the private placement securities held, or to be held, by them and holders of
units or warrants that may be issued upon conversion of working capital loans. 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 are not limited
to completing an initial business combination in any industry or geographical region, although we are not, under our amended and
restated certificate of incorporation, permitted to effectuate our initial business combination with another blank check company
or similar company with nominal operations. 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.
Risks Related to
Consummating a Business Combination
We may not have
sufficient funds to consummate a business combination.
As of December 31,
2020, Collective Growth had approximately $284,330 available to it outside the trust account to fund its working capital requirements.
On March 1, 2021, the Sponsor loaned Collective Growth an aggregate of $100,000 for working capital purposes, which loan was evidenced
by a convertible promissory note. If Collective Growth is required to seek additional capital, it would need to borrow funds from
the Sponsor, its management team or other third parties to operate or it may be forced to liquidate. None of such persons is under
any obligation to advance funds to Collective Growth in such circumstances. Any such advances would be repaid only from funds
held outside the trust account or from funds released to Collective Growth upon completion of the Business Combination. If Collective
Growth is unable to consummate the Business Combination because it does not have sufficient funds available, Collective Growth
will be forced to cease operations and liquidate the trust account. Consequently, Collective Growth’s public stockholders
may receive less than $10 per share and their warrants will expire worthless.
If Collective
Growth’s stockholders fail to properly demand conversion rights, they will not be entitled to convert their Collective Growth
Common Stock into a pro rata portion of the trust account.
Our stockholders
holding public shares may demand that we convert their public shares into a pro rata portion of the trust account, calculated
as of two (2) business days prior to the special meeting. To demand conversion rights, Collective Growth stockholders must
deliver their shares (either physically or electronically) to our transfer agent no later than two (2) business days prior
to the special meeting. Any stockholder who fails to properly demand conversion rights by delivering his, her or its shares will
not be entitled to convert his, her or its shares into a pro rata portion of the trust account.
We may issue additional securities
without seeking approval of stockholders, which would dilute your ownership interests and may depress the market price of our
securities.
We may issue securities
upon consummation of an initial business combination. Further, following the consummation of the business combination, we may
also issue additional securities of equal or senior rank in the future for any reason or in connection with, among other things,
future acquisitions, the redemption of outstanding warrants or repayment of outstanding indebtedness, without shareholder approval,
in a number of circumstances.
Subsequent to the completion
of a business combination, the combined company may be required to take write-downs or write-offs, restructuring and impairment
or other charges that could have a significant negative effect on its financial condition, results of operations and the combined
company’s ordinary share price, which could cause you to lose some or all of your investment.
Although we will
conduct extensive due diligence on any target business we seek to acquire, we cannot assure you that this diligence will surface
all material issues that may be present in a target’s business, that it would be possible to uncover all material issues
through a customary amount of due diligence, or that factors outside of a target’s business and outside of its control will
not later arise. As a result of these factors, the combined company may be forced to later write-down or write-off assets,
restructure its operations, or incur impairment or other charges that could result in its reporting losses. Even if Collective
Growth’s due diligence successfully identified certain risks, unexpected risks may arise and previously known risks may
materialize in a manner not consistent with Collective Growth’s preliminary risk analysis. Even though these charges may
be non-cash items and would not have an immediate impact on the combined company’s liquidity, the fact that the
combined company reports charges of this nature could contribute to negative market perceptions of the combined company or its
securities. In addition, charges of this nature may cause the combined company to violate net worth or other covenants to which
the combined company may be subject as a result of assuming pre-existing debt held by a target’s business or by
virtue of the combined company obtaining post-combination debt financing. Accordingly, any stockholders who choose to remain shareholders
following the business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have
a remedy for such reduction in value.
Collective Growth’s current
directors and executive officers and their affiliates own shares of Collective Growth Common Stock, and private placement units,
and private placement warrants that will be worthless if the Business Combination is not approved. Such interests may have influenced
their decision to approve the Business Combination.
If the business
combination with Innoviz or another business combination is not consummated by November 5, 2021 (or such later date as may
be approved by Collective Growth’s stockholders), Collective Growth will cease all operations except for the purpose of
winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders
and its board of directors, dissolving and liquidating. In such event, the 3,750,000 shares of Class B Stock held by the
Sponsor and Collective Growth’s directors and officers, which were acquired for an aggregate purchase price of $25,000 prior
to the Collective Growth IPO, would be worthless because the holders are not entitled to participate in any redemption or distribution
with respect to such shares. Further, the Sponsor, which is affiliated with certain of Collective Growth’s directors and
officers, other certain officers, and Cantor Fitzgerald & Co., purchased an aggregate of 262,500 private placement
units at a price of $10.00 per unit and an aggregate of 1,875,000 private placement warrants at a price of $1.00 per warrant,
concurrently with the Collective Growth IPO, for an aggregate purchase price of $4,500,000. The Class B Stock, Class A
Stock, warrants underlying the private units, and the private warrants will become worthless if Collective Growth does not consummate
a business combination by November 5, 2021 (or such later date as may be approved by Collective Growth stockholders in an
amendment to our Charter).
These financial
interests may influence the decision of Collective Growth’s directors and officers to approve any business combination.
The Sponsor, an affiliate of
a director of Collective Growth, is liable to ensure that proceeds of the trust account are not reduced by vendor claims in the
event the Business Combination is not consummated. Such liability may have influenced the board’s decision to pursue the
Business Combination and the board’s decision to approve it.
If the business
combination with Innoviz or another business combination is not consummated by Collective Growth on or before November 5,
2021, the Sponsor, an affiliate of a director of Collective Growth, will be liable to ensure that the proceeds in the trust account
are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Collective Growth
for services rendered or contracted for or for products sold to Collective Growth, but only if such a vendor or target business
has not executed a waiver agreement. If Collective Growth consummates a business combination, on the other hand, Collective Growth
will be liable for all such claims. Collective Growth has no reason to believe that the Sponsor will not be able to fulfill its
indemnity obligations to Collective Growth. These obligations of the Sponsor may influence the board’s decision to pursue
any business combination.
Collective Growth’s directors may decide not to
enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the trust account available
for distribution to Collective Growth’s public stockholders in the event a business combination is not consummated.
If proceeds in
the trust account are reduced below $10.00 per public share and the Sponsor asserts that it is unable to satisfy its indemnification
obligations or that it has no indemnification obligations related to a particular claim, Collective Growth’s independent
directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations. While Collective
Growth currently expects that its independent directors would take legal action on Collective Growth’s behalf against the
Sponsor to enforce the Sponsor’s indemnification obligations, it is possible that Collective Growth’s independent
directors in exercising their business judgment may choose not to do so in any particular instance. If Collective Growth’s
independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available
for distribution to Collective Growth’s public stockholders may be reduced below $10.00 per share.
If Collective Growth is unable
to complete a business combination by November 5, 2021 (or such other date as approved by Collective Growth stockholders
through approval of an amendment to the SPAC Charter), Collective Growth will cease all operations except for the purpose of winding
up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and its board of
directors, dissolving and liquidating. In such event, Collective Growth public stockholders may only receive $10 per share (or
less than such amount in certain circumstances) and Collective Growth warrants will expire worthless.
If Collective
Growth is unable to complete a business combination within the required time period, Collective Growth will (i) cease all
operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any
interest released to Collective Growth to pay Collective Growth’s income taxes and dissolution expenses, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of its remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case
of (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of
other applicable law. In such case, Collective Growth public stockholders may only receive $10 per share, and Collective Growth
warrants will expire worthless. In certain circumstances, Collective Growth public stockholders may receive less than $10 per
share on the redemption of their shares.
In the event of liquidation
by Collective Growth, third parties may bring claims against Collective Growth and, as a result, the proceeds held in the trust
account could be reduced and the per-share liquidation price received by stockholders could be less than $10 per share.
Under the terms
of our Charter, we must complete a business combination by November 5, 2021 (unless such date is extended by Collective Growth’s
stockholders) or Collective Growth must cease all operations except for the purpose of winding up, redeeming 100% of the outstanding
public shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating.
In such event, third parties may bring claims against Collective Growth. Although Collective Growth has obtained waiver agreements
from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses it has negotiated
with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held
in the trust account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse
against the trust account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity
of such agreements. Accordingly, the proceeds held in the trust account could be subject to claims which could take priority over
those of Collective Growth’s public stockholders. If Collective Growth is unable to complete a business combination within
the required time period, the Sponsor has agreed that it will be liable to Collective Growth if and to the extent any claims by
a vendor for services rendered or products sold to it, or a prospective target business with which it has discussed entering into
a transaction agreement, reduces the amount of funds in the trust account to below $10.00 per public share, except as to any claims
by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under
Collective Growth’s indemnity of the underwriters of the initial public offering against certain liabilities, including
liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third
party, the Sponsor will not be responsible to the extent of any liability for such third party claims. Furthermore, the Sponsor
will not be liable to public stockholders and instead will only have liability to Collective Growth. Collective Growth has not
independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and, therefore, the Sponsor
may not be able to satisfy those obligations. Collective Growth has not asked the Sponsor to reserve for such eventuality. Therefore,
the per-share distribution from the trust account in such a situation may be less than the approximately $10.01 estimated
to be in the trust account as of two business days prior to the special meeting date, due to such claims.
Additionally,
if Collective Growth is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed,
or if Collective Growth otherwise enters compulsory or court supervised liquidation, the proceeds held in the trust account could
be subject to applicable bankruptcy law and may be included in its bankruptcy
Collective Growth’s stockholders
may be held liable for claims by third parties against Collective Growth to the extent of distributions received by them.
If Collective
Growth is unable to complete a business combination within the required time period, Collective Growth will (i) cease all
operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any
interest released to Collective Growth to pay Collective Growth’s income taxes and dissolution expenses, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of its remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case
of (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of
other applicable law. Collective Growth cannot assure you that it will properly assess all claims that may be potentially brought
against Collective Growth. As such, Collective Growth’s stockholders could potentially be liable for any claims to the extent
of distributions received by them (but no more) and any liability of its stockholders may extend well beyond the third anniversary
of the date of distribution. Accordingly, Collective Growth cannot assure you that third parties will not seek to recover from
its stockholders amounts owed to them by Collective Growth.
Additionally,
if Collective Growth is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it that is not dismissed,
any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a
“preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover
all amounts received by Collective Growth’s stockholders. Because Collective Growth intends to distribute the proceeds held
in the trust account to its public stockholders promptly after the expiration of the time period to complete a business combination,
this may be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to
access to or distributions from its assets. Furthermore, Collective Growth’s board may be viewed as having breached their
fiduciary duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and Collective Growth to claims
of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. Collective
Growth cannot assure you that claims will not be brought against it for these reasons.
Collective Growth may be a target
of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the Business
Combination from being completed.
Securities class
action lawsuits and derivative lawsuits are often brought against companies that have entered into business combination agreements
or similar agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs
and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact
on Collective Growth’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction
prohibiting consummation of the Transactions, then that injunction may delay or prevent the Transactions from being completed.
The Sponsor and Collective Growth’s
officers and directors have agreed to vote in favor of the Business Combination, regardless of how Collective Growth’s public
stockholders vote.
The Sponsor,
as well as Collective Growth’s officers and directors, beneficially own and are entitled to vote an aggregate of approximately
21.1% of the outstanding Collective Growth Common Stock. These holders have agreed to vote their shares in favor of the business
combination proposal. These holders have also indicated that they intend to vote their shares in favor of all other proposals
being presented at the meeting. Accordingly, it is more likely that the necessary stockholder approval for the business combination
proposal and the other proposals will be received than would be the case if these holders agreed to vote their founder shares
in accordance with the majority of the votes cast by Collective Growth’s public stockholders.
General Risk Factors
We may not have sufficient funds to satisfy indemnification
claims of our directors and executive officers.
We have agreed to
indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to
waive (and any other persons who may become an officer or director prior to the initial business combination will also be required
to waive) any right, title, interest or claim of any kind in or to any monies in the trust account and not to seek recourse against
the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only
if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation
to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors
for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation
against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage
awards against our officers and directors pursuant to these indemnification provisions.
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 or our advisors is not a guarantee either (i) that we will be able to locate a suitable candidate for our
initial business combination or (ii) of success with respect to any business combination we may consummate. You should not rely
on the historical record of our management team’s or our advisors’ respective performance as indicative of our future
performance of an investment in the company or the returns the company will, or is likely to, generate going forward. Additionally,
in the course of their respective careers, members of our management team and our advisors have been involved in businesses and
transactions that were not successful. None of our officers and directors has had experience with blank check companies or special
purpose acquisition companies in the past.
Our search for
a business combination, and any target business with which we ultimately consummate a business combination, may be materially
adversely affected by the coronavirus (COVID-19) pandemic.
The COVID-19 pandemic
has adversely affected the economies and financial markets worldwide, and the business of any potential target business with which
we consummate a business combination could be materially and adversely affected. Furthermore, we may be unable to complete a business
combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential
investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate
a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend
on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning
the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed
by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business
combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially
adversely affected.
As the number of special purpose
acquisition companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for
attractive targets. This could increase the cost of our initial business combination and could even result in our inability to
find a target or to consummate an initial business combination.
In recent years and
especially in the last several months, the number of special purpose acquisition companies that have been formed has increased
substantially. Many potential targets for special purpose acquisition companies have already entered into an initial business
combination, and there are still many special purpose acquisition companies seeking targets for their initial business combination,
as well as many such companies currently in registration. As a result, at times, fewer attractive targets may be available, and
it may require more time, more effort and more resources to identify a suitable target and to consummate an initial business combination.
In addition, because
there are more special purpose acquisition companies seeking to enter into an initial business combination with available targets,
the competition for available targets with attractive fundamentals or business models may increase, which could cause targets
companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or
industry sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations
or operate targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our
ability to find and consummate an initial business combination, and may result in our inability to consummate an initial business
combination on terms favorable to our investors altogether.
Changes in the market for directors
and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business
combination.
In recent months,
the market for directors and officers liability insurance for special purpose acquisition companies has changed. The premiums
charged for such policies have generally increased and the terms of such policies have generally become less favorable. There
can be no assurance that these trends will not continue.
The increased cost
and decreased availability of directors and officers liability insurance could make it more difficult and more expensive for us
to negotiate an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage
as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less
favorable terms or both. However, any failure to obtain adequate directors and officers liability insurance could have an adverse
impact on the post-business combination’s ability to attract and retain qualified officers and directors.
In addition, even
after we were to complete an initial business combination, our directors and officers could still be subject to potential liability
from claims arising from conduct alleged to have occurred prior to the initial business combination. As a result, in order to
protect our directors and officers, the post-business combination entity will likely need to purchase additional insurance with
respect to any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for the
post-business combination entity, and could interfere with or frustrate our ability to consummate an initial business combination
on terms favorable to our investors.