Item
1. Business
References
in this report to “we,” “us” or the “Company” refer to Genesis Unicorn Capital Corp. References to
our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor”
refer to Genesis Unicorn Capital LLC, a Delaware limited liability company.
Company
Profile
Genesis
Unicorn Capital Corp. was formed on February 23, 2021 formed under the laws of the State of Delaware, as a blank check company for the
purpose of engaging in a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar
Business Combination, with one or more target businesses or entities (a “Business Combination”). While we may pursue an Initial
Business Combination target in any business, industry, sector or geographic location, we intend to capitalize on the ability of our management
team to identify promising opportunities at the intersection of the healthcare and technology industries, specifically within the biotechnology
and pharmaceutical sectors. Our objective is to focus on middle market and emerging growth businesses operating with a total enterprise
value from $200 million to $1 billion, which companies may be located throughout the world except for an entity or business with its
principal or a majority of its business operations (either directly or through any subsidiaries) in the People’s Republic of China
(including Hong Kong and Macau).
Our
Registration Statement on Form S-1 was declared effective by the SEC on February 14, 2022. EF Hutton, division of Benchmark Investments,
LLC, acted as sole bookrunner for our initial public offering. We may refer to our initial public offering in this Annual Report on Form
10-K as our “Initial Public Offering” or “IPO”. On February 17, 2022, we consummated our Initial Public Offering
of 7,500,000 units (each a “Unit” and collectively, the “Units”). Each Unit consists of one share of Class A
common stock, par value $0.0001 per share, and one redeemable warrant, with each whole warrant entitling the holder thereof to purchase
one share of Class A common stock for $11.50 per share, subject to adjustment. The Units were sold at a price of $10.00 per Unit, generating
gross proceeds to us of $75,000,000. In connection with our Initial Public Offering, the underwriters
were granted a 45-day option to purchase up to 1,125,000 additional Units to cover over-allotments, if any. On February 15, 2022, the
underwriters elected to exercise the over-allotment option in full, resulting in the same of 1,125,000 additional units at an offering
price of $10.00 per Unit for additional gross proceeds of $11,250,000.
Simultaneously
with the consummation of the Initial Public Offering, we completed the private sale to the Sponsor of an aggregate of 377,331 placement
units (including 30,937 Units as a result of the underwriters’ exercise of its allotment option at a price of $10.00 per Unit,
generating gross proceeds to the Company of $3,773,310. These Sponsor private placement units are identical to the units sold in the
IPO, except that the Sponsor has agreed not to transfer, assign or sell any of the Sponsor private placement units (except to certain
permitted transferees) until 30 days after the completion of the Company’s Initial Business Combination (“Initial Business
Combination”). No underwriting discounts or commissions were paid with respect to the private placement.
A
total of $87,543,750 comprised of proceeds from the IPO (including the proceeds received from the exercise by the underwriters of the
over-allotment option) and the sale of the private placement units (including the proceeds received as a result of the underwriters’
exercise of the over-allotment option) were placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental Stock
Transfer & Trust Company acting as trustee.
Our
Sponsor made an initial investment of $25,000 in exchange for 2,156,250 shares of our Class B common stock (up to 281,250 shares of which
were subject to forfeiture by our Sponsor depending on the extent to which the underwriters’ over-allotment option is exercised),
which will automatically convert into shares of Class A common stock at the time of the consummation of our Initial Business Combination,
on a one-for-one basis, subject to adjustment as described herein. As the underwriters exercised their over-allotment option in
full, none of our shares of Class B common stock were forfeited. Additionally, our Sponsor purchased an aggregate of 377,331 private
placement units at a price of $10.00 per unit, for an aggregate purchase price of $3,773,310.
As
a result of the IPO, the exercise in full by the underwriters of the over-allotment option, the private placement by our Sponsor and
the purchase of shares of Class A common stock by the lead underwriter, and assuming all of the Units separate into their component parts,
we had outstanding: (i) 9,002,331 units, (ii) 11,201,706 shares of common stock consisting of 9,045,456 shares of Class A common stock
(including 8,625,000 shares of Class A common stock that are subject to redemption) and 2,156,250 shares of Class B common stock. We
have not issued any securities since such date.
Prior
to the IPO, there had been no public market for our Units, shares of common stock or warrants. Our Units are listed for trading on the
Nasdaq Global Market, or Nasdaq, under the symbol “GENQU”. The shares of Class A common stock and warrants comprising the
Units had begun separately trading as of April 7, 2022 under the symbols “GENQ,” and “GENQW,” respectively. As
our IPO registration statement and Form 8A were not declared effective by the SEC until February 14, 2022, we were not a filing company
under the Securities and Exchange Act of 1934, as amended until such date.
Upon
the closing of the IPO, a total of $87,543,750 (which amount includes $2,803,125 of the underwriters’ deferred discount), comprised
of the proceeds from the IPO (including the proceeds received from the exercise by the underwriters of the over-allotment option) and
the sale of the private placement unit (including the proceeds received as a result of the underwriters’ exercise of the over-allotment
option) were placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company
acting as trustee.
The
funds held in trust has been invested only 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, so that we are not deemed
to be an investment company under the Investment Company Act. Except with respect to interest earned on the funds held in the trust account
that may be released to us to pay our income or other tax obligations, the proceeds will not be released from the trust account until
the earlier of the completion of a Business Combination or our redemption of 100% of the outstanding public shares if we have not completed
a Business Combination in the required time period. The proceeds held in the trust account may be used as consideration to pay the sellers
of a target business with which we complete a Business Combination. Any amounts not paid as consideration to the sellers of the target
business may be used to finance operations of the target business.
Since
our IPO, our sole business activity has been identifying and evaluating suitable acquisition transaction candidates, engaging in
non-binding discussions with potential target entities and executing the business combination transaction with ESGL Holdings Limited. We presently have no revenue and have had losses since inception from incurring formation and operating costs since
completion of our IPO.
Recent
Developments
Business
Combination with ESGL Holdings Limited
On
November 29, 2022, we entered into an agreement and plan of merger (the “Merger Agreement”) with EGSL Holdings Limited,
a Cayman Islands exempted company, and wholly-owned subsidiary of Genesis Unicorn Capital Corp. (“Purchaser”), ESGH
Merger Sub Corp., a Cayman Islands exempted company and a wholly-owned subsidiary of Purchaser (“Merger Sub”),
Environmental Solutions Group Holdings Limited, a Cayman Islands exempted company (“ESGL”), and Quek Leng Chuang, solely
in his capacity as the shareholder representative, agent and attorney-in-fact of the shareholders of ESGL (the “Shareholder
Representative”). Upon the closing of the transactions contemplated by the Merger Agreement, (a) Genesis Unicorn Capital Corp.
will be merged with and into the Purchaser (the “Redomestication Merger”), with the Purchaser surviving the
Redomestication Merger; and (b) Merger Sub will be merged with and into ESGL (the “Acquisition Merger”), with ESGL
surviving the Acquisition Merger as a direct wholly-owned subsidiary of the Purchaser (collectively, the Redomestication Merger and
the Acquisition Merger are the “Merger” of the Business Combination”). Following the Business Combination, the
Purchaser will be a publicly traded company listed on a stock exchange in the United States.
Consideration
Pursuant
to the terms of the Merger Agreement, the aggregate consideration to be paid at the closing of the Business Combination to existing
shareholders of ESGL is $75,000,000 less certain transaction costs, the net cash debt of ESGL as of the closing and an estimate of
the working capital adjustment described below (the “Merger Consideration”), which will be paid in newly issued ordinary
shares of the Purchaser, as the publicly traded surviving company, at a deemed price of $10.00 per share. The Merger Consideration
otherwise payable at the closing of the Business Combination to shareholders of ESGL shall be reduced by 375,000 ordinary shares of
the Purchaser (the “Holdback Amount”). Within 90 days following the closing of the Business Combination, the Shareholder
Representative and the representative of the Purchaser shall receive a closing statement from the Purchaser setting forth the amount
of working capital of the Purchaser, subject to the parties’ confirmation. Following the final determination of the working
capital amount at closing compared to the target working capital amount of $3,500,000, the Merger Consideration shall be adjusted
accordingly based on the working capital adjustment provisions contained in the Merger Agreement, with each ESGL shareholder
receiving its pro rata share of the Holdback Amount, if any.
The
Closing
The
parties have agreed that the closing of the Business Combination shall occur no later than June 30, 2023, unless extended upon the written
agreement of the parties.
Board
of Directors of Surviving Corporation
Pursuant
to the terms of the Merger Agreement, immediately after the closing, the Purchaser’s board of directors shall consist of six
(6) directors, of whom one individual will be designated by Genesis Unicorn Capital Corp. and of whom five (5) individuals will be
designated by ESGL. The Genesis Unicorn Capital Corp. designee and three (3) of the five (5) ESGL designees shall be deemed
independent in accordance with Nasdaq requirements.
Additional
Agreements executed at the signing of the Merger Agreement
Contemporaneously
with the signing of the Merger Agreement, certain holders of ESGL ordinary shares executed lock-up agreements.
Lock-up
Agreements
Pursuant
to the Lock-Up Agreements such holders have agreed, subject to certain customary exceptions, not to (i) sell, offer to sell,
contract or agree to sell, pledge or otherwise dispose of, directly or indirectly, any Genesis Unicorn Capital Corp. shares of
common stock held by them (such shares, together with any securities convertible into or exchangeable for or representing the rights
to receive Genesis Unicorn Capital Corp. common stock if any, acquired during the Lock-Up Period (the “Lock-up
Shares”)); (ii) enter into a transaction that would have the same effect; (iii) enter into any swap, hedge or other
arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Lock-Up Shares or
otherwise or engage in any short sales or other arrangement with respect to the Lock-Up Shares: or (iv) publicly announce any
intention to effect any transaction specified in clause (i) or (ii), in each case until the date that is six (6) months after the
closing date of the Initial Business of Combination (the “Lock-Up Period”).
Shareholder
Support Agreement
Contemporaneously
with the execution of the Merger Agreement, certain holders of ESGL ordinary shares entered into a support agreement, pursuant to which
such holders agreed to, among other things, approve the Merger Agreement and the proposed Initial Business Combination.
Sponsor
Support Agreement
Contemporaneously
with the execution of the Merger Agreement, certain holders of Genesis Unicorn Capital Corp. common stock entered into a support
agreement, pursuant to which such holders agreed to, among other things, approve the Merger Agreement and the proposed Initial
Business Combination.
Additional
Agreement to be executed at Closing
Amended
and Restated Registration Rights Agreement
At
the closing of the Initial Business Combination, the Purchaser will enter into an amended and restated registration rights agreement
(the “Registration Rights Agreement”) with certain existing stockholders of Genesis Unicorn Capital Corp. with
respect to certain shares and private units (and the private shares, private warrants and shares underlying the private warrants
included therein) they own at the closing of the Initial Business Combination. The Registration Rights Agreement provides certain
demand registration rights and piggyback registration rights to the securityholders, subject to underwriter cutbacks. The Purchaser
will agree to pay certain fees and expenses relating to registrations under the Registration Rights Agreement.
Amendment
of the Amended and Restated Certificate of Incorporation
Change
in Extension of Time to Complete a Business Combination.
On
February 14, 2023, at a special meeting of stockholders of the Company the stockholders voted upon and approved amendments (the “Extension
Amendment Proposal”) to the Company’s amended and restated certificate of incorporation (the “Charter”) to permit
the Board of Directors of the Company to extend the date by which the Company has to consummate a business combination twelve (12) times
for an additional one (1) month each time from February 17, 2023 to February 17, 2024 (the termination date as ay be so extended, the
“Extended Date”). The Company’s stockholders also approved an amendment (the “Trust Amendment Proposal”)
to the Company’s investment management agreement, dated as of February 14, 2022 (the “Trust Agreement”) by and between
the Company and Continental Stock Transfer & Trust Company, to provide that the time for the Company to complete its Initial Business
Combination (the “Business Combination Period”) under the Trust Agreement for a period of 12 months from February 17, 2023
to February 17, 2024 and to the extent the Charter is amended to extend the Business Combination Period under the Trust Agreement by depositing into the trust account $0.06 per share for each issued and outstanding share of common
stock issued in the IPO (each, a “Public Share”) that has not been redeemed for each one-month extension (each an “Extension
Payment”).
Prior
to the special meeting of stockholders to amend the Charter and the Trust Agreement, the Company had the right to extend the Business
Combination Period from February 17, 2023 to August 17, 2023 (i.e., 18 months from the consummation of the Company’s IPO. The only
way to extend the Business Combination Period from February 17, 2023 to August 17, 2023 for two (2) successive three-month periods without
the need for a separate stockholder vote under the current Charter and Trust Agreement is for the Company’s sponsor or its affiliates
or designees, upon five days’ advance notice, to deposit into the Trust Account $1,725,000 each time (i.e., $0.20 per issued and
outstanding Public Share), on or prior to February 17, 2023 and May 17, 2023, respectively.
As
a result of the approval of the Extension Amendment Proposal and the Trust Amendment Proposal, the Company will have the right to extend
the Combination Period twelve (12) times for an additional one (1) month each time, from February 17, 2023 to February 17, 2024, provided
that the Extension Payment of $0.06 per Public Share that has not been redeemed is deposited into the Trust Account each time at each
extension election. The amount of funds deposited into the Trust account in connection with extensions of time to complete the Business
Combination will be different than what would have been deposited into that account in the absence of the approval of the foregoing Proposals.
In
connection with the stockholders’ vote at the Special Meeting, 3,177,941 shares were tendered for redemption. As a result of the
redemption, we have outstanding 8,023,765 shares of common stock consisting of 5,867,515 shares of Class A common stock (including
5,447,059 shares of Class A common stock that are subject to redemption) and 2,156,250 shares of Class B common stock. As of March 8,
2023, the balance in the trust account was $55,566,189.
The
Company’s management believes that it can close the Business Combination before February 17, 2024. Under the circumstances, Genesis
Unicorn Capital, LLC (the “Sponsor”) wants to pay an extension amount up to $3,921,882 for the extension provided by the
Charter and Trust Agreement.
Net
Tangible Asset Requirement Amendment
On
February 14, 2023, at the Special Meeting of Stockholders, Stockholders also approved the proposal to amend Section 9.2(a) of GUCC’s
Amended and Restated Certificate of Incorporation by deleting the existing Section 9.2(a) and replacing it with the following: “9.2(a)
Prior to the consummation of the initial Business Combination, the Corporation shall provide all holders of Offering Shares with the
opportunity to have their Offering Shares redeemed upon the consummation of the initial Business Combination or upon the vote of a proposal
to amend the Amended and Restated Certificate pursuant to, and subject to the limitations of, Sections 9.2(b) and 9.2(c) (such rights
of such holders to have their Offering Shares redeemed pursuant to such Sections, the “Redemption Rights”) hereof for cash
equal to the applicable redemption price per share determined in accordance with Section 9.2(b) hereof (the “Redemption Price”);
provided, however, that the Corporation shall not redeem Offering Shares (i) in an amount that would cause the Corporation to have net
tangible assets to be less than $5,000,001 (such limitation hereinafter called the “Redemption Limitation”) either immediately
prior to or upon consummation of the initial Business Combination and after payment of any underwriters’ fees and commissions or
any greater net tangible assets or cash requirement which may be contained in the agreement relating to the initial Business Combination,
or (ii) otherwise is exempt from the provisions of Rule 419 promulgated under the Securities Act of 1933, as amended. Notwithstanding
anything to the contrary contained in this Amended and Restated Certificate, there shall be no Redemption Rights or liquidating distributions
with respect to any warrant issued pursuant to the Offering.”
On
February 26, 2023, all parties of the Merger Agreement dated November 29, 2022, entered into an agreement to waive the NTA Requirement
contained in Section 10.1(g) of the Merger Agreement.
Management
Business Combination Experiences
Our
management team is led by Dr. Adeoye Olukotun, Samuel Lui, Dr. Niel Starksen, Juan Fernandez Pascal and our directors – Grainne
Coen, Ernest Fong, Chung Fan Cheng and Teck-Yong Heng. We have also engaged as advisors a group of individuals (Dr. Hank Wuh and Dr,
Robert Chang) with extensive experience in the medical and healthcare fields. The individuals serving as our directors and as our advisors
and officers have experience in acquiring businesses in the international marketplace, executive leadership, operational oversight, private
equity investment management and capital markets experience in various industries, including healthcare. Our directors, offices and advisors
also have experience with developing corporate strategy and implementation and identification of new and advancing technologies, which
we believe will significantly benefit us as we evaluate potential acquisition or merger candidates as well as following the completion
of our Initial Business Combination.
The
past performance of the members of our management team or their affiliates is not a guarantee that we will be able to identify a suitable
candidate for our Initial Business Combination or of success with respect to any Business Combination we may consummate. You should not
rely on the historical record of the performance of our management team or any of its affiliates’ performance as indicative of
our future performance.
Business
Strategy
While
we may pursue an Initial Business Combination target in any industry or geographic location, we intend to focus our search on middle
market and emerging growth biotech and pharmaceutical-focused companies, businesses or assets that benefit from continuously evolving
technology and the resulting shift in consumer and business purchase behavior. Most of these companies will ultimately need to consolidate
to achieve the scale necessary to attain high revenue growth and attractive profitability. We believe that acquiring a leading high-growth
technology company or assets in the healthcare, biotechnology or pharmaceutical industry will provide a platform to fund consolidation
and fuel growth for our company. We have not identified any particular geographical area or country in which we may seek a Business Combination.
However, we shall not consider or undertake a Business Combination with an entity or business with its principal or a majority of its
business operations (either directly or through any subsidiaries) in the People’s Republic of China (including Hong Kong and Macau).
We
believe that there is a large pool of quality Initial Business Combination targets looking for exit opportunities with an increasing
number of private equity (or PE) and venture capital (or VC) activities in the Americas, which provides us opportunities given what we
believe are the limited exit options for mid-market companies in the region. Also, we believe that the technology and tech enabled industries
in the Americas represent a particularly attractive deal sourcing environment that will allow us to leverage our team’s skill sets
and experience to identify an Initial Business Combination which can potentially serve as a strong platform for future add-on acquisitions.
We believe that the proposed Initial Business Combination with the Environmental Solutions Group Holdings Limited is consistent with
the foregoing strategy of identifying technology and tech enabled industries.
Our
investment thesis is supported by what we believe are the following trends in our target sectors:
-
Growth in research and development: Scientific breakthroughs and innovations in oncology, gene therapy, synthetic biology, personalized
medicine, precision medicine, rare diseases, and other sub-sectors of the biopharmaceutical and life sciences industries, are creating
new opportunities for investors in the sector. According to EvaluatePharma, worldwide pharmaceutical R&D spend is expected to reach
over $230 billion by 2026, an approximately 50% increase over ten years.
-
Robust private market deal activity: Strong levels of venture capital activity in the biotechnology sector support our pursuit of
an Initial Business Combination. According to a recent Analyst note from Pitchbook, biotechnology and pharmaceutical start-ups raised
over $23 billion in venture capital financing across 865 deals in 2020 as of November 18, 2020 breaking the deal value record set in
2018. Since 2015, biotechnology and pharmaceutical start-ups raised over $80 billion across over 4,000 deals. Many of these companies
continue to grow and may view the public markets as an attractive alternative to support their growth.
-
Regulatory environment: The FDA continues to approve new drugs at a healthy pace. There were 228 novel drug approvals in the five-year
period from 2016 to 2020. This represents a 44% increase over the number of novel drugs approved over the period from 2010 to 2014. The
constructive regulatory environment is encouraging continued investment in the biotechnology and pharmaceutical sectors.
Competitive
Advantages
We
intend to capitalize on the following competitive advantages in our pursuit of a target company:
| |
● |
Leadership
of an Experienced Management Team. Our experienced management team has over 35 years of combined work experience as investment
professionals in a variety of industries, such as pharmaceutical and financial institutions. These years of experience have allowed
us to gain not only extensive and deep expertise in our fields, but also vast networks of some of the most influential thought leaders
and top performing companies in our target industries and region. This positions Genesis Unicorn Capital Corp as a unique and strategic
player, and as an attractive alternative for the many companies that seek to tap the equity capital markets, ensuring that we find
the most attractive opportunities that maximize value to our stockholders. |
| |
● |
Established
Deal Sourcing Network. We believe the strong track record of our management team will enable us to get access to quality
deal pipeline. In addition, we believe that our management team and advisors, can generate acquisition opportunities and possibly
seek complementary follow-on business arrangements through their international network of contacts in, among others, private and
public companies, private equity and venture capital funds, investment banks, accounting and law firms. |
| |
|
|
| |
● |
Status
as a Publicly Listed Acquisition Company. We believe our structure will make us an attractive Business Combination partner
to prospective target businesses. As a publicly listed company, we will offer a target business an alternative to the traditional
initial public offering process. We believe that some target businesses will favor this alternative, which we believe is less expensive,
while offering greater certainty of execution, than the traditional initial public offering process. During an initial public offering,
there are typically underwriting fees and marketing expenses, which would cost more than a Business Combination with us. Furthermore,
once a proposed Business Combination is approved by our stockholders (if applicable) and the transaction is consummated, the target
business will have effectively become public, whereas an initial public offering is always subject to the underwriter’s ability
to complete the offering, as well as general market conditions that could prevent the offering from occurring. Once public, we believe
our target business would have greater access to capital and additional means of creating management incentives that are better aligned
with stockholders’ interests than it would as a private company. It can offer further benefits by augmenting a target company’s
profile among potential new customers and vendors and aid in attracting talented management staffs. |
| |
|
|
| |
● |
Targeting
of Fastest Growing Industries. The main industries we are targeting are in the biotechnology and pharmaceutical sectors.
This is not just a function of our expertise in these fields, but it is also because these sectors are currently anticipated to be
some of the fastest growing industries in the global economy, with the expectation that the biotechnology sector will expand at a
CAGR of approximately 15.83% from 2021 to 2028, while the pharmaceutical sector will expand at a CAGR of approximately 10.23% for
the corresponding period. |
Acquisition
Criteria and Process
Our
acquisition strategy is to complete a Business Combination that will create value for our stockholders over time. We expect to conduct
intensive diligence of a potential target, including but not limited to deal structure, financial forecasting and scientific viability
using our management team’s expertise combined with the opinions of key industry leaders in their network of relationships. While
we may enter into a Business Combination with a company that does not meet all of these criteria, we intend to focus on companies that
we believe have the following characteristics:
-Therapeutics-focused
business (i.e. biopharmaceuticals) with potential to significantly advance care for the disease of focus.
-Preclinical
through commercial stage assets, with investments focused on programs that are both pre-proof-of-concept (“PoC”) and
post-PoC.
-A
company with minimal additional equity required to achieve significant defined clinical, regulatory or commercial milestones beyond
the capital provided by the target, us and any potential concurrent PIPE.
Consistent
with our strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective
target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, although we may decide to enter
into our Initial Business Combination with a target business that does not meet these criteria and guidelines.
| |
● |
Revenue
and Earnings Growth Potential. We will seek to acquire one or more businesses that have the potential for significant revenue
and earnings growth through a combination of both existing and new product development, increased production capacity, expense reduction
and synergistic follow-on acquisitions resulting in increased operating leverage. |
| |
|
|
| |
● |
Potential
for Strong Free Cash Flow Generation. We will seek to acquire one or more businesses that have the potential to generate
strong, stable and increasing free cash flow. We intend to focus on one or more businesses that have the potential for predictable,
recurring revenue streams and definable low working capital and capital expenditure requirements. We may also seek to prudently leverage
this cash flow in order to enhance stockholder value. |
| |
|
|
| |
● |
Strong
and Experienced Management. We will seek companies that have strong, experienced management teams in place, or are a platform
to assemble an effective management team with a track record of driving growth and profitability. We will spend significant time
assessing a company’s leadership and human fabric, and maximizing its efficiency over time. |
| |
|
|
| |
● |
Benefit
from Being a Public Company. We intend to acquire one or more businesses that will benefit from being publicly traded and
can effectively utilize the broader access to capital and the public profile that are associated with being a publicly traded company. |
| |
|
|
| |
● |
Defensible
Market Position. We intend to acquire one or more businesses that have a defensible market position, with demonstrated advantages
when compared to their competitors and which create barriers to entry against new competitors. |
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular Initial Business Combination may be
based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that from time to time
our management may deem relevant.
Initial
Business Combination
Nasdaq
rules require that we must complete one or more Business Combinations having an aggregate fair market value of at least 80% of the value
of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on
the trust account) at the time of our signing a definitive agreement in connection with our Initial Business Combination. Our board of
directors will make the determination as to the fair market value of our Initial Business Combination. If our board of directors is not
able to independently determine the fair market value of our Initial Business Combination, we will obtain an opinion from an independent
investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such
criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair
market value of our Initial Business Combination, it may be unable to do so if it is less familiar or experienced with the business of
a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. Additionally,
pursuant to Nasdaq rules, any Initial Business Combination must be approved by a majority of our independent directors.
We
anticipate structuring our Initial Business Combination so that the post-transaction company in which our public stockholders own shares
will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our Initial
Business Combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target
business in order to meet certain objectives of the prior owners of the target business, the target management team or stockholders or
for other reasons, but we will only complete such Business Combination if the post-transaction company owns or acquires 50% or more of
the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be
required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the
Business Combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the
target and us in the Business Combination transaction. For example, we could pursue a transaction in which we issue a substantial number
of new shares in exchange for all of the outstanding capital stock, shares or other equity interests 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 issued and 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 valued
for purposes of the 80% fair market value test. If the 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 target businesses and we will treat the target businesses together as our
Initial Business Combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
To
the extent we effect our Initial Business Combination with a company or business that may be financially unstable or in its early stages
of development or growth, we may be affected by numerous risks inherent in such company or business. Although our management will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things,
meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational,
legal and other information which will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our Initial Business Combination, and the costs
associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of a prospective target business with which our Initial Business Combination is not ultimately completed will result in
our incurring losses and will reduce the funds we can use to complete another Business Combination.
Sourcing
of Potential Initial Business Combination Targets
Certain
members of our management team have spent significant portions of their careers working with businesses in the technology industry and
have developed a wide network of professional services contacts and business relationships in that industry. The members of our board
of directors also have significant executive management and public company experience with technology related companies and bring additional
relationships that further broaden our industry network.
This
network has provided our management team with a flow of referrals that have resulted in numerous transactions in the past. We believe
that the network of contacts and relationships of our management team will provide us with an important source of acquisition opportunities.
In addition, we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including
investment market participants, private equity groups, investment banks, consultants, accounting firms and large business enterprises.
Members
of our management team and our independent directors will directly or indirectly own founder shares and/or placement units following
the Initial Public Offering and, accordingly, may have a conflict of interest in determining whether a particular target business is
an appropriate business with which to effectuate our Initial Business Combination. Further, each of our officers and directors may have
a conflict of interest with respect to evaluating a particular Business Combination if the retention or resignation of any such officers
and directors was included by a target business as a condition to any agreement with respect to our Initial Business Combination.
In
addition, each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual
obligations to other entities pursuant to which such officer or director is or will be required to present a Business Combination opportunity
to such entity. The personal and financial interests of our directors and officers may influence their motivation in timely identifying
and selecting a target business and completing a Business Combination. The different timelines of competing Business Combinations could
cause our directors and officers to prioritize a different Business Combination over finding a suitable acquisition target for our Business
Combination. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially
affect our ability to complete our Initial Business Combination.
In
addition, our Sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours
or may pursue other business or investment ventures during the period in which we are seeking an Initial Business Combination. Any such
companies, businesses or investments may present additional conflicts of interest in pursuing an Initial Business Combination. However,
we do not believe that any such potential conflicts would materially affect our ability to complete our Initial Business Combination.
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 following the Initial Public
Offering. We intend to effectuate our Initial Business Combination using cash from the proceeds of the Initial Public Offering and the
sale of the private placement units, the proceeds of the sale of our shares in connection with our Initial Business Combination (pursuant
to backstop agreements we may enter into following the consummation of the Initial Public Offering or otherwise), shares issued to the
owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing. We may seek
to complete our Initial Business Combination with a company or business that may be financially unstable or in its early stages of development
or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If
our Initial Business Combination is paid for using equity or debt securities, or not all of the funds released from the trust account
are used for payment of the consideration in connection with our Initial Business Combination or used for redemptions of our Class A
common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for
maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred
in completing our Initial Business Combination, to fund the purchase of other companies or for working capital.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our
Initial Business Combination, and we may effectuate our Initial Business Combination using the proceeds of such offering rather than
using the amounts held in the trust account. In addition, we intend to target businesses larger than we could acquire with the net
proceeds of the Initial Public Offering and the sale of the private placement units, and may as a result be required to seek
additional financing to complete such proposed Initial Business Combination. Subject to compliance with applicable securities laws,
we would expect to complete such financing only simultaneously with the completion of our Initial Business Combination. In the case
of an Initial Business Combination funded with assets other than the trust account assets, our proxy materials or tender offer
documents disclosing the Initial Business Combination would disclose the terms of the financing and, only if required by applicable
law or stock exchange requirements, 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.
We
have 12 months (or up to 24 months if we extend the period of time to consummate a Business Combination, as described in more detail
below) from the consummation of our IPO to consummate our Initial Business Combination. Public stockholders will not be offered the opportunity
to vote on or redeem their shares in connection with such extensions. If we are unable to consummate our Initial Business Combination
within such time period, we will distribute the aggregate amount then on deposit in the trust account including interest earned on the
funds held in the trust account (net of taxes payable), pro rata to our public stockholders, by way of redemption of their shares, and
thereafter cease operations except for the purpose of winding up our affairs, as further described herein. We expect the pro rata redemption
price to be $10.15 per share (regardless of whether or not the underwriters exercise their over-allotment option), without taking into
account any interest earned on such funds. However, we cannot assure you that we will in fact be able to distribute such amounts as a
result of claims of creditors which may take priority over the claims of our public stockholders.
As
stated above, we will have 12 months from the consummation of our IPO to consummate our Initial Business Combination. However, if we
anticipate that we may not be able to consummate our Initial Business Combination within 12 months, we may, but are not obligated
to, extend the period of time to consummate a Business Combination up to twelve (12) successive monthly periods at our option, up to
24 months in total from the closing of the IPO, and provided further that our Sponsor deposits into the trust account the sum of
$0.06 per share ($326,824 monthly extension fee as a result of recent redemption in connection with the Special Meeting), subject to
our board of directors authorizing such extension and the Sponsor or its affiliates or designees depositing additional funds into
the trust account as set out below. Pursuant to the terms of our amended and restated certificate of incorporation and the trust
agreement entered into between us and Continental Stock Transfer & Trust Company, in order to extend the time available for us
to consummate our Initial Business Combination, our board of directors would adopt a resolution approving such extension and our
founders or their respective affiliates or designees (which may include the potential target business), upon five (5) days advance
notice prior teach applicable deadline, must deposit into the trust account $326,824 ($0.06 per public share) for each monthly
extension, up to an aggregate of $3,921,882, or $0.72 per public share (for an aggregate of twelve months), on or prior to the date
of the applicable deadline, for each extension. The insiders or the Sponsor (or their respective affiliates or designees) providing
such additional funds will receive non-interest bearing, unsecured promissory notes equal to the amount of any such deposit. The
loan is be interest free and will not be repaid in the event that we are unable to close a Business Combination unless there are
funds available outside the trust account to do so. Such notes would either be paid upon consummation of our Initial Business
Combination, or, at the purchaser’s discretion, converted upon consummation of our Business Combination into additional units
on the basis of $10.00 per private unit. Public stockholders will not be offered the opportunity to vote on or redeem their shares
in connection with such extension. If we are unable to consummate our Initial Business Combination within such time period, we will
distribute the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust
account (net of taxes payable), pro rata to our public stockholders, by way of redemption of their shares, and thereafter cease
operations except for the purpose of winding up our affairs, as further described herein.
The
Company’s management believes that it can close the Business Combination before February 17, 2024. Under the circumstances, Genesis
Unicorn Capital, LLC (the “Sponsor”) wants to pay an extension amount up to $3,921,882 for the extension provided by the
Charter and Trust Agreement.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their public 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 maintain a listing for our securities on
Nasdaq, we will be required to comply with such rules.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days,
in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our Initial Business Combination until
the expiration of the tender offer period. In addition, we will not redeem any public shares unless our net tangible assets will be at
least $5,000,001 either immediately prior to or upon consummation of our Initial Business Combination and after payment of underwriters’
fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset
or cash requirement which may be contained in the agreement relating to our Initial Business Combination, or otherwise is exempt from
the provisions of Rule 419 promulgated under the Securities Act of 1933, as amended. 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.
Status
as a Public Company and Financial Considerations
We
believe our structure will make us an attractive Business Combination partner to target businesses. As an existing public company, we
offer a target business an alternative to the traditional initial public offering through a merger or other Business Combination. In
this situation, the owners of the target business would exchange their shares of stock in the target business for our shares of common
stock or for a combination of our shares of common stock and cash, allowing us to tailor the consideration to the specific needs of the
sellers. We believe target businesses might find this method a more certain and cost-effective method to becoming a public company than
the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, roadshow
and public reporting efforts that will likely not be present to the same extent in connection with a Business Combination with us. Furthermore,
once the Business Combination is consummated, the target business will have effectively become public, whereas an initial public offering
is always subject to the underwriters’ ability to complete the offering, as well as general market conditions that could prevent
the offering from occurring. We believe the target business would then have greater access to capital and an additional means of providing
management incentives consistent with stockholders’ interests than it would have as a privately-held company. It can offer further
benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While
we believe that our status as a public company will make us an attractive business partner, some potential target businesses may view
the inherent limitations in our status as a blank check company as a deterrent and may prefer to effect a Business Combination with a
more established entity or with a private company. These inherent limitations include limitations on our available financial resources,
which may be inferior to those of other entities pursuing the acquisition of similar target businesses; the requirement that we seek
stockholder approval of a Business Combination, which may delay the consummation of a transaction; and the existence of our outstanding
warrants, which may represent a source of future dilution.
With
funds in the trust account of approximately $55,566,189 available to use for a Business Combination,
we offer a target business a variety of options such as providing the owners of a target business with shares in a public company and
a public means to sell such shares, providing capital for the potential growth and expansion of its operations or strengthening its balance
sheet by reducing its debt ratio. Because we are able to consummate our Initial Business Combination using our cash, debt or equity securities,
or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration
to be paid to the target business to fit its needs and desires. In connection with any potential acquisition, we may be required to obtain
acquisition financing. However, since we have no specific Business Combination under consideration, we have not taken any steps to secure
third party financing and there can be no assurance that it will be available to us. We may seek to raise additional funds through a
private offering of debt or equity securities in connection with the completion of our Business Combination, and we may effectuate our
Business Combination using the proceeds of such offering rather than using the amounts held in the trust account.
We
chose our net tangible asset threshold of $5,000,001 or otherwise is exempt from the provisions of Rule 419 promulgated under the Securities
Act of 1933 in order to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act of 1933, as amended.
However, if we seek to consummate an initial business combination with a target business that imposes any type of working capital closing
condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such initial business
combination, we may need to have more than $5,000,001 in net tangible assets upon consummation and this may force us to seek third party
financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate such initial
business combination and we may not be able to locate another suitable target within the applicable time period, if at all. Public stockholders
may therefore have to wait up to 24 months from the closing of our IPO in order to be able to receive a pro rata share of the trust account.
Summary
Information Related to Our Securities, Redemption Rights and Liquidation
We
are a Delaware corporation and our affairs are governed by our amended and restated certificate of incorporation, and the Delaware General
Corporation Law. Pursuant to our amended and restated certificate of incorporation, we are authorized to issue (i) 125,000,000 shares
of Class A common stock, $0.0001 par value each; (ii), 12,500,000 shares of Class B common stock, par value $0.0001 each; and (iii) 1,250,000
shares pf preferred stock, par value $0.0001 per share. The information provided below is a summary only and we refer you to our amended
and restated certificate of incorporation and our warrant agreement with Continental Stock Transfer & Trust Company as warrant agent
for additional important and material information.
As
of March 8, 2023, we have 8,023,765 common stock issued and outstanding, consisting of 5,867,515 shares of Class A common stock
issued and outstanding (including 377,331 private placement shares and 43,125 representative shares) and 2,156,250 shares of Class B
common stock (sometimes referred to as “Founder Shares”). The Class B common stock is convertible into shares of Class A
common stock on a one-for-one basis, subject to adjustment. Common stockholders of record are entitled to one vote for each share
held on all matters to be voted on by stockholders and vote together as a single class, except as required by law. Unless specified
by applicable law, our amended and restated certificate of incorporation or applicable stock exchange rules, the affirmative vote of
a majority of our shares of common stock that are voted is required to approve any such matter voted on by our stockholders.
Directors are elected for a term of one year. Our stockholders are entitled to receive ratable dividends when, as and if declared by
the Board of Directors out of funds legally available therefor.
We
will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of
our Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
as of two business days prior to the consummation of our Business Combination, including interest (which interest shall be net of
taxes payable) divided by the number of then issued and outstanding public shares, subject to the limitations described herein. The
amount in the trust account is initially anticipated to be approximately $10.15 per public share (subject to increase of up to an
additional $0.72 per public share in the event that our Sponsor elects to extend the period of time to consummate a Business
Combination).
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 their founder shares, private placement shares and any public shares they may hold in connection with the completion
of our Business Combination.
If
a stockholder vote is not required by law 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, conduct the redemptions pursuant to the tender offer rules of the
SEC, and file tender offer documents with the SEC prior to completing our Business Combination. If, however, stockholder approval of
the transaction is required by law, or we decide to obtain stockholder approval for business or other legal reasons, we will, like many
blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to
the tender offer rules. If we seek stockholder approval, we will complete our Business Combination only if a majority of the issued and
outstanding shares of common stock voted are voted in favor of the Business Combination. However, the participation of our Sponsor, officers,
directors or their affiliates in privately-negotiated transactions, if any, could result in the approval of our Business Combination
even if a majority of our public stockholders vote, or indicate their intention to vote, against such Business Combination.
If
we seek stockholder approval of our Business Combination and we do not conduct redemptions in connection with our Business Combination
pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together
with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate
of 15% of the shares sold in our IPO, 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 Business Combination.
If
we do not complete a Business Combination within 12 months (or up to 24 months, as discussed above) from the closing of our IPO, we will
(i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten (10) business
days thereafter, redeem 100% of the outstanding public shares 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 (ii)
and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
In
connection with our IPO we issued an aggregate of 8,625,000 warrants to acquire an aggregate of 8,625,000 shares of Class A common stock.
In addition, in the private placement with our Sponsor that we completed simultaneously with the IPO, we also issued 377,331 warrants
to acquire 377,331 shares of Class A common stock. The warrants purchased in our IPO have been issued in registered form under a warrant
agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. Each warrant entitles the registered holder
to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing
on the later of 12 months from the date we consummated our IPO or 30 days from the completion of our Business Combination. Because the
warrants may only be exercised for whole numbers of shares, only an even number of warrants may be exercised at any given time. Pursuant
to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares. This means that only an even
number of warrants may be exercised at any given time by a warrant holder. The warrants will expire five (5) years after the completion
of our Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
Once
the warrants become exercisable, we may call the warrants for redemption:
| |
● |
in
whole and not in part; |
| |
|
|
| |
● |
upon
a minimum of 30 days’ prior written notice of redemption, |
| |
|
|
| |
● |
if,
and only if, the last sales price of our shares of common stock equals or exceeds $18.00 per share for any 20 trading days within
a 30-trading day period ending three business days before we send the notice of redemption, and |
| |
|
|
| |
● |
if,
and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants
at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the
date of redemption. |
The
redemption price for the warrants shall be either (i) if the holder of a warrant has followed the procedures specified in our notice
of redemption and surrendered the warrant, the number of shares of common stock as determined in accordance with the “cashless
exercise” provisions of the warrant agreement or (ii) if the holder of a warrant has not followed such procedures specified in
our notice of redemption, the price of $0.01 per warrant. If the foregoing conditions are satisfied and we issue a notice of redemption,
each warrant holder can exercise his, her or its warrant prior to the scheduled redemption date either by paying the cash exercise price
or on a “cashless exercise” basis. However, the price of our shares of Class A common stock may fall below the $18.00 trigger
price, as well as the $11.50 warrant exercise price after the redemption notice is issued.
The
private warrants are identical to the warrants included in the Units sold in our IPO except for certain transfer restrictions as described
herein. The purchasers of the private warrants have agreed not to transfer, assign or sell any of the private warrants or underlying
securities (except to the same permitted transferees as the Sponsor and provided the transferees agree to the same terms and restrictions
as the permitted transferees of the Sponsor must agree to) until the completion of our Initial Business Combination. In the event of
a liquidation prior to our Initial Business Combination, the private warrants will expire worthless.
Competition
In
identifying, evaluating and selecting a target business for our Initial Business Combination, we may encounter intense competition from
other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, and operating businesses seeking strategic Business Combinations. Many of these entities are well established and have
extensive experience identifying and effecting Business Combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses 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.
Employees
We
currently have four executive officers. These individuals are not obligated to devote any specific number of hours to our matters, but
each intends to devote as much of his time as he deems necessary to our affairs until we have completed our Initial Business Combination.
The amount of time that he 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.
Corporate
Information
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities
Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act of 2002, or 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 (5th)
anniversary of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our shares of 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. References herein to “emerging growth company” shall have the meaning
associated with it in the JOBS Act.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held
by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues exceeded
$100 million during such completed fiscal year and the market value of our common stock held by non- affiliates exceeds $700 million
as of the end of that year’s second fiscal quarter.
We
are a Delaware corporation incorporated on February 23, 2021. Our executive offices are located at 281 Witherspoon Street, Suite 120,
Princeton, New Jersey 08540, and our telephone number is (609) 466-0792.
Available
Information
We
are required to file Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q with the SEC on a regular basis, and are required
to disclose certain material events in a Current Report on Form 8-K. The SEC maintains an Internet website that contains reports, proxy
and information statements and other information regarding issuers that file electronically with the SEC. The SEC’s Internet website
is located at www.sec.gov. In addition, the Company will provide copies of these documents without charge upon request from us in writing
at 281 Witherspoon Street, Suite 120, Princeton, New Jersey 08540.
Item
1A. Risk Factors
As
a smaller reporting company, we are not required to include risk factors in this Annual Report. However, below is a partial list of material
risks, uncertainties and other factors that could have a material effect on the Company and its operations.
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this Annual Report, before making a decision to invest in our securities. If any of the following
events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading
price of our securities could decline, and you could lose all or part of your investment. Any of these factors could result in a significant
or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or
that we currently deem immaterial may also impair our business or results of operations.
Summary
of Risk Factors
Our
business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors”
immediately following this summary. These risks include, but are not limited to:
| |
● |
Our
public stockholders may not be afforded an opportunity to vote on our proposed Initial Business Combination, and even if we hold
a vote, holders of our Sponsor shares will participate in such vote, which means we may complete our Initial Business Combination
even though a majority of our public stockholders do not support such a combination. |
| |
|
|
| |
● |
Your
only opportunity to effect your investment decision regarding a potential Business Combination may be limited to the exercise of
your right to redeem your shares from us for cash. |
| |
● |
Our
search for a Business Combination, and any partner business with which we ultimately complete a Business Combination, may be materially
adversely affected by the recent coronavirus (COVID-19) pandemic, any worsening of the pandemic or other disease outbreaks and the
status of debt and equity markets. |
| |
|
|
| |
● |
We
may not be able to complete our Initial Business Combination within 12 months after the closing of the IPO (or such later period,
if extended), in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares
and liquidate. |
| |
|
|
| |
● |
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. |
| |
|
|
| |
● |
If
third parties bring claims against us, the funds held in the trust account could be reduced and the per-share redemption amount received
by stockholders may be less than $10.15 per share. |
| |
|
|
| |
● |
We
may not hold an annual general meeting until after the consummation of our Initial Business Combination, which could delay the opportunity
for our stockholders to appoint directors. |
| |
|
|
| |
● |
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we
may enter into our Initial Business Combination with a target that does not meet such criteria and guidelines, and as a result, the
target business with which we enter into our Initial Business Combination may not have attributes entirely consistent with our general
criteria and guidelines. |
| |
|
|
| |
● |
We
are not required to obtain an opinion from an independent investment banking firm or from a valuation or appraisal firm, and consequently,
you may have no assurance from an independent source that the price we are paying for the business is fair to our stockholders from
a financial point of view. |
| |
● |
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a Business Combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us. |
| |
|
|
| |
● |
We
may attempt to complete our Initial Business Combination with a private company about which little information is available, which
may result in a Business Combination with a company that is not as profitable as we suspected, if at all. |
| |
|
|
| |
● |
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete
our Initial Business Combination with which a substantial majority of our stockholders do not agree. |
| |
● |
We
may be unable to obtain additional financing to complete our Initial Business Combination or to fund the operations and growth of
a target business, which could compel us to restructure or abandon a particular Business Combination. |
| |
|
|
| |
● |
Our
initial stockholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder
vote, potentially in a manner that you do not support. |
| |
|
|
| |
● |
We
may engage in a Business Combination with one or more target businesses that have relationships with entities that may be affiliated
with our Sponsor, officers, directors or existing holders which may raise potential conflicts of interest. |
| |
|
|
| |
● |
Since
our Sponsor, officers and directors will lose their entire investment in us if our Initial Business Combination is not completed
(other than with respect to public shares they acquired during or may acquire after the IPO), a conflict of interest may arise in
determining whether a particular Business Combination target is appropriate for our Initial Business Combination. |
| |
|
|
| |
● |
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our
Initial Business Combination. |
| |
|
|
| |
● |
We
may seek Business Combination opportunities in industries or sectors that may be outside of our management’s areas of expertise. |
| |
|
|
| |
● |
Our
ability to successfully effect our Initial Business Combination and to be successful thereafter will be dependent upon the efforts
of our key personnel, some of whom may join us following our Initial Business Combination. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business. |
| |
|
|
| |
● |
You
will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. Therefore, to
liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss. |
| |
|
|
| |
● |
Our
initial stockholders paid an aggregate of $25,000, or approximately $0.012 per Founder Share and, accordingly, you will experience
immediate and substantial dilution from the purchase of shares of our Class A common stock. |
| |
|
|
| |
● |
You
will not be permitted to exercise your warrants unless we register and qualify the underlying shares of Class A common stock or certain
exemptions are available. |
| |
|
|
| |
● |
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants
worthless. |
| |
|
|
| |
● |
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. |
| |
|
|
| |
● |
Past
performance by our management team and their affiliates, including investments and transactions in which they have participated and
businesses with which they have been associated, may not be indicative of future performance of an investment in the Company. |
General
Risks Factors in Investing in a SPAC Entity and Completing a Business Combination
We
are an early-stage company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve
our business objective.
We
are an early-stage company established under the laws of the State of Delaware 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 business combination
with one or more target businesses. Although we have entered into an agreement for a business combination as described above, consummation
of the transactions contemplated by such agreements are subject to customary conditions of respective parties including the approval
of the Merger Agreement by our shareholders, and minimum net tangible assets immediately after the closing. Accordingly, we may be unable
to complete our business combination. If we fail to complete our business combination, we will never generate any operating revenues.
Our
public shareholders may not be afforded an opportunity to vote on our proposed Business Combination, which means we may complete our
Business Combination even though a majority of our public shareholders do not support such a combination.
We
may not hold a stockholder vote to approve our Business Combination unless the Business Combination would require stockholder approval
under applicable Delaware law or the rules of the Nasdaq or if we decide to hold a stockholder vote for business or other reasons. Examples
of transactions that would not ordinarily require stockholder approval include asset acquisitions and share purchases, while transactions
such as direct mergers with our company or transactions where we issue more than 20% of our outstanding shares would require stockholder.
For instance, the Nasdaq rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would still require
us to obtain stockholder approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration
in any Business Combination. Therefore, if we were structuring a Business Combination that required us to issue more than 20% of our
outstanding shares, we would seek stockholder approval of such Business Combination. Except as required by law or Nasdaq rules, the decision
as to whether we will seek stockholder approval of a proposed Business Combination or will allow stockholders to sell their shares to
us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the
transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Accordingly, we may consummate
our Business Combination even if holders of a majority of the issued and outstanding shares of common stock do not approve of the Business
Combination we consummate.
If
we seek stockholder approval of our Business Combination, our Sponsor, officers and directors have agreed to vote in favor of such Business
Combination, regardless of how our public shareholders vote.
Unlike
other blank check companies in which the initial stockholders agree to vote their Sponsor shares in accordance with the majority of
the votes cast by the public stockholders in connection with an Initial Business Combination, our Sponsor, officers and directors
have agreed (and any permitted transferees will agree), pursuant to the terms of a letter agreement entered into with us, to vote
any Sponsor shares held by them, as well as any public shares purchased during or after our IPO, in favor of our Initial Business
Combination. We expect that our Sponsor and its permitted transferees will own approximately 31.58% of our issued and outstanding
shares at the time of any such stockholder vote (taking into account shares of Class A common stock underlying units purchased in
the private placement and the shares of Class B common stock held by our initial stockholders but not taking into account shares
issuable upon exercise of private placement warrants and assuming it did not purchase units in our IPO). As a result, in addition to
our initial stockholder’s Founder Shares and shares of Class A common stock purchased by the Sponsor in the private placement,
we would need only 1,478,303 shares, or approximately 18.42%, of the total issued and outstanding shares of common stock after the
completion of our IPO to be voted in favor of a transaction in order to have our Initial Business Combination approved, which
requires the affirmative vote of a majority of the shares of common stock that are voted a meeting of our stockholders to approve a
Business Combination.
Our
Sponsor has the right to extend the term we have to consummate our Business Combination, without providing our stockholders with redemption
rights.
We
will have until 12 months from the closing of our IPO to consummate our Initial Business Combination. Our board of directors may extend the period of time
to consummate a Business Combination up to twelve (12) successive monthly extension (for a total of up to 24 months to complete a Business
Combination), subject to the authorization by our board of directors and the deposit of additional funds into the trust account by our
Sponsor or its affiliates or designees as described elsewhere in this Report. Our stockholders will not be entitled to vote or redeem
their shares in connection with any such extension. In order for the time available for us to consummate our Initial Business Combination
to be extended, our Sponsor or its affiliates or designees must deposit into the trust account $326,824 ($0.06 per public
share) for each monthly extension, on or prior to the date of the applicable deadline, up to an aggregate of $3,921,882, or $0.72 per
public share if we extend for the full twelve (12) months extension.
Any
such payments may be made in the form of a non-interest-bearing loan from our Sponsor or its affiliates or designees and would be repaid,
if at all, from funds released to us upon completion of our Initial Business Combination. Any obligation to repay such loans may reduce
the amount available to us to pay as purchase price in our Initial Business Combination, and/or may reduce the amount of funds available
to the combined company following the Initial Business Combination. This feature is different than the traditional special purpose acquisition
company structure, in which any extension of the Company’s period to complete a Business Combination requires a vote of the company’s
stockholders and stockholders have the right to redeem their public shares in connection with such vote, and which do not provide the
Sponsor with the right to loan funds to the company to fund extension payments.
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 shareholder approval of the 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 one or more
target businesses. Since our Board of Directors may complete a Business Combination without seeking stockholder approval, public stockholders
may not have the right or opportunity to vote on the Business Combination, unless we seek such stockholder approval. 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 Business Combination.
The
ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential Business
Combination targets, which may make it difficult for us to enter into a Business Combination with a target.
We
may seek to enter into a Business Combination transaction agreement with a 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 Business Combination. Furthermore, in
no event will we redeem our public shares in an amount that would cause our net tangible assets, after payment of the deferred underwriting
commissions, to be less than $5,000,001 upon consummation of our Business Combination (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 Business Combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets
to be less than $5,000,001 upon consummation of our Business Combination or such greater amount necessary to satisfy a closing condition
as described above, we would not proceed with such redemption and the related Business Combination and may instead search for an alternate
Business Combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a Business Combination
transaction with us.
The
ability of our public shareholders 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 Business Combination, we will not know how many stockholders may exercise their redemption
rights, and therefore we will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our 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. The above considerations may limit our ability to complete the most desirable Business
Combination available to us or optimize our capital structure.
The
ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability
that our Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If
our 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 Business Combination would be unsuccessful is increased. If
our Business Combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust
account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our
shares may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material
loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to
sell your shares in the open market.
The
requirement that we complete our Business Combination within the prescribed time frame may give potential target businesses leverage
over us in negotiating a 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 Business Combination on terms that
would produce value for our shareholders.
Any
potential target business with which we enter into negotiations concerning a Business Combination will be aware that we must complete
our Business Combination within 12 months from the closing of our IPO (or up to 24 months from the closing of our IPO if we extend the
period of time to consummate a Business Combination, as described in more detail in this report). Consequently, such target business
may obtain leverage over us in negotiating a Business Combination, knowing that if we do not complete our Business Combination with that
particular target business, we may be unable to complete our 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
Business Combination on terms that we would have rejected upon a more comprehensive investigation.
In
connection with any vote to approve a Business Combination, we will offer each public stockholder the option to vote in favor of a proposed
Business Combination and still seek redemption of his, her or its shares.
In
connection with any vote to approve a Business Combination, we will offer each public stockholder (but not our founders, officers or
directors) the right to have his, her or its shares of common stock redeemed for cash (subject to the limitations described elsewhere
in this report and in the prospectus for our Initial Public Offering) regardless of whether such stockholder votes for or against such
proposed Business Combination. This ability to seek redemption while voting in favor of our proposed Business Combination may make it
more likely that we will consummate a Business Combination.
We
may not be able to complete our 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 shareholders may only receive
$10.15 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our
Sponsor, officers and directors have agreed that we must complete our Business Combination within 12 months from the closing of our IPO
(or up to 24 months from the closing of our IPO if we extend the period of time to consummate a Business Combination). We may not be
able to find a suitable target business and complete our Business Combination within such time period. If we have not completed our 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 (which interest shall be net of taxes payable, and less interest
to pay dissolution expenses) divided by the number of then issued and outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our Board of Directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. In such case, our public stockholders may only receive $10.15 per share, and
our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.15 per share on the redemption
of their shares. 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 $10.15 per share.
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 outbreak and the status of debt and equity markets.
In
December 2019, a novel strain of coronavirus was reported to have surfaced, which has and is continuing to spread throughout the world.
On January 30, 2020, the World Health Organization declared the outbreak of COVID-19 a “Public Health Emergency of International
Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for
the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization
characterized the outbreak as a “pandemic.” The COVID-19 outbreak has resulted in a widespread health crisis that has adversely
affected economies and financial markets worldwide, business operations and the conduct of commerce generally, and the business of any
potential target business with which we consummate a Business Combination could be, or may already have been, materially and adversely
affected. Furthermore, we may be unable to complete a Business Combination if concerns relating to COVID-19 continue to restrict travel
or 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.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted
by COVID-19 and other events, including as a result of increased market volatility and decreased market liquidity and third-party financing
being unavailable on terms acceptable to us or at all.
Our
Sponsor may decide not to extend the term we have to consummate our Business Combination, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate, and the warrants will be worthless.
We
will have until 12 months from the closing of our IPO to consummate our Initial Business Combination. However, if we anticipate that
we may not be able to consummate our Initial Business Combination within 12 months, we may extend the period of time to consummate a
Business Combination up to twelve (12) successive one-month periods (for a total of up to 24 months to complete a Business Combination),
subject to our board of directors authorizing such extension and the Sponsor depositing additional funds into the trust account as described
elsewhere in this report. However, our Sponsor and its affiliates or designees are not obligated to fund the trust account to extend
the time for us to complete our Initial Business Combination. If we are unable to consummate our Initial Business Combination within
the applicable time period, we will, as promptly as reasonably possible but not more than ten (10) business days thereafter, redeem the
public shares for a pro rata portion of the funds held in the trust account and as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such event, the warrants
will be worthless.
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 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 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 price per share paid in any such transaction may be different than the amount per share a public stockholder would receive if it
elected to redeem its shares in connection with our Initial Business Combination. The purpose of such purchases could be to vote such
shares in favor of the Business Combination and thereby increase the likelihood of obtaining stockholder approval of the Business Combination
or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash
at the closing of our Initial Business Combination, where it appears that such requirement would otherwise not be met. This may result
in the completion of our Initial Business Combination that may not otherwise have been possible. The purpose of any such purchases of
public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the
warrant holders for approval in connection with our Initial Business Combination.
Any
such purchases of our securities may result in the completion of our Initial Business Combination that may not otherwise have been possible.
We expect that any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers
are subject to such reporting requirements.
In
addition, if such purchases are made, the public “float” of our Class A common stock or public warrants and the number of
beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading
of our securities on a national securities exchange.
If
a shareholder fails to receive notice of our offer to redeem our public shares in connection with our Business Combination, or fails
to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our Initial Business
Combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy solicitation or tender offer materials,
as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or
tender offer materials, 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 redeem or tender public shares. For example, we may
require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in
“street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer
or proxy materials documents mailed to such holders, or up to two (2) business days prior to the scheduled vote on the proposal to approve
the Initial Business Combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically.
In the event that a stockholder fails to comply with these procedures, its shares may not be redeemed.
If
we are unable to complete our Initial Business Combination, our public stockholders may receive only approximately $10.15 per share,
or less in certain circumstances, on our redemption, and our warrants will expire worthless.
We
may be unable to complete our Initial Business Combination for a number of reasons. For example, we expect to encounter intense competition
from other entities having a business objective similar to ours, including private investors (which may be individuals or investment
partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend
to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly
or indirectly, acquisitions of companies operating in or providing services to various industries and possess greater technical, human
and other resources or more local industry knowledge than we do. Further, our financial resources may 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 units, our ability to compete with respect to the acquisition of certain
target businesses that are sizable will be limited by our available financial resources. Furthermore, if we are obligated to pay cash
for the shares of common stock redeemed, it would reduce the resources available to us for our Initial Business Combination. Any of these
obligations may place us at a competitive disadvantage in successfully negotiating a Business Combination. If we are unable to complete
our Initial Business Combination, our public stockholders may receive only approximately $10.15 per share (or less in certain circumstances)
on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may
receive less than $10.15 per share on the redemption of their shares.
Because
of our structure, limited resources and the significant competition for Business Combination opportunities, other companies may have
a competitive advantage and we may not be able to consummate an attractive Business Combination.
We
expect to encounter intense competition from 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, including venture capital funds, leveraged
buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience
in identifying and effecting Business Combinations directly or through affiliates. Many of these competitors possess greater technical,
human and other resources than we do and our financial resources will be relatively limited when compared to those of many of these competitors.
While we believe that there are numerous potential target businesses that we could acquire with the net proceeds of our IPO, our ability
to compete in acquiring certain sizable target businesses 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 and completing an Initial business combination.
Furthermore, seeking stockholder approval or engaging in a tender offer in connection with any proposed Business Combination may delay
the consummation of such a transaction. Additionally, our outstanding warrants, and the future dilution they potentially represent, may
not be viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage in successfully
negotiating and consummating a Business Combination. If we are unable to complete our Initial Business Combination, our public stockholders
may receive only approximately $10.15 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 $10.15 per share upon our liquidation.
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 earlier to occur of: (i) our completion of
an Initial Business Combination, and then only in connection with those shares of common stock that such stockholder properly elected
to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly tendered in connection with
a stockholder vote to amend our Amended and Restated Certificate of Incorporation to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our Initial Business Combination within 12 months (or 24 months if extended)
from the closing of our IPO and (iii) the redemption of our public shares if we are unable to complete an Initial Business Combination
within 12 months (or 24 months if extended) from the closing of our IPO, subject to applicable law and as further described herein. In
addition, if we have not completed an Initial Business Combination within the required time period for any reason, compliance with Delaware
law may require that we submit a plan of dissolution to our then existing stockholders for approval prior to the distribution of the
proceeds held in our trust account. In that case, public stockholders may be forced to wait beyond the end of such period before they
receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the
trust account. Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants. Accordingly,
to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
The
requirement that the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of
the balance of the funds in the trust account (less any taxes payable on interest earned and less any interest earned thereon that is
released to us for taxes) at the time of the execution of a definitive agreement for our Initial Business Combination may limit the type
and number of companies with whom we may complete such a Business Combination.
Pursuant
to the Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at
least 80% of the balance of the funds in the trust account (less any taxes payable on interest earned and less any interest earned thereon
that is released to us for taxes) at the time of the execution of a definitive agreement for our Initial Business Combination. This restriction
may limit the type and number of companies with whom we may complete an Initial Business Combination. If we are unable to locate a target
business or businesses that satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive
your pro rata portion of the funds in the trust account. If Nasdaq delists our securities from trading on its exchange, we would not
be required to satisfy the fair market value requirement described above and could complete a Business Combination with a target business
having a fair market value substantially below 80% of the balance in the trust account.
In
connection with any stockholder meeting called to approve a proposed Initial Business Combination, we may require stockholders who wish
to redeem their shares in connection with a proposed Business Combination to comply with specific requirements for redemption that may
make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their redemption rights.
In
connection with any stockholder meeting called to approve a proposed Initial Business Combination, each public stockholder will have
the right, regardless of whether he is voting for or against such proposed Business Combination, to demand that we redeem his or her
shares into a pro rata share of the trust account as of two (2) business days prior to the consummation of the Initial Business Combination.
We may require public stockholders who wish to redeem their shares in connection with a proposed Business Combination to either (i) tender
their certificates (if any) to our transfer agent or (ii) deliver their shares to the transfer agent electronically using the Depository
Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holders’ option, in each case prior to a date set forth
in the tender offer documents or proxy materials sent in connection with the proposal to approve the Business Combination. In order to
obtain a physical share certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer agent will need to act
to facilitate this request. It is our understanding that stockholders should generally allot at least two (2) weeks to obtain physical
certificates from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may
take significantly longer than two (2) weeks to obtain a physical share certificate. While we have been advised that it takes a short
time to deliver shares through the DWAC System, we cannot assure you of this fact. Accordingly, if it takes longer than we anticipate
for stockholders to deliver their shares, stockholders who wish to redeem may be unable to meet the deadline for exercising their redemption
rights and thus may be unable to redeem their shares.
If,
in connection with any stockholder meeting called to approve a proposed Business Combination, we require public stockholders who wish
to redeem their shares to comply with specific requirements for redemption, such redeeming stockholders may be unable to sell their securities
when they wish to in the event that the proposed Business Combination is not approved.
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares
in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer
documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the Business
Combination in the event we distribute proxy materials or to deliver their shares to the transfer agent electronically using The Depository
Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting against the Initial Business Combination
at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares
in connection with our Initial Business Combination will indicate whether we are requiring public stockholders to satisfy such delivery
requirements, which will include the requirement that a beneficial holder must identify itself in order to validly redeem its shares.
Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer
period, or up to two (2) business days prior to the scheduled vote on the Business Combination if we distribute proxy materials, as applicable,
to tender its shares if it wishes to seek to exercise its redemption rights. Pursuant to the tender offer rules, the tender offer period
will be not less than 20 business days and, in the case of a stockholder vote, a final proxy statement would be mailed to public stockholders
at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders
well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation.
Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through
The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System. The transfer agent will typically charge the tendering
broker a nominal fee and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee
would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need
to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with
their Business Combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an Initial
Business Combination, and a holder could simply vote against a proposed Business Combination and check a box on the proxy card indicating
such holder was seeking to exercise his or her redemption rights. After the Business Combination was approved, the company would contact
such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had
an “option window” after the completion of the Business Combination during which he or she could monitor the price of the
company’s stock in the market. If the price rose above the redemption price, he or she could sell his or her shares in the open
market before actually delivering his or her shares to the Company for cancellation. As a result, the redemption rights, to which stockholders
were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the completion
of the Business Combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery
prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the Business Combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or two
(2) business days prior to the scheduled date of the stockholder meeting set forth in our proxy materials, as applicable (unless we elect
to allow additional withdrawal rights). 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 proposed Business Combination is not completed, we may continue to try to complete a Business Combination until 12 months
from the consummation of our IPO or during any extension period. 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.
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 units are intended to be used to complete a Business Combination with
a target business that has not been identified, we may be deemed to be a “blank check” company under the United States securities
laws. However, because we have listed our securities on the Nasdaq Global Market and have net tangible assets in excess of $5,000,001
upon the completion of our IPO and the sale of the private placement units and filed a Current Report on Form 8-K, including an audited
balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies,
such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means
our units will be immediately tradable and we may 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 Business Combination.
If
we seek shareholder approval of our Business Combination and we do not conduct redemptions pursuant to the tender offer rules, and if
you or a “group” of shareholders are deemed to hold in excess of 15% of our shares of common stock, you will lose the ability
to redeem all such shares in excess of 15% of our shares of common stock.
If
we seek stockholder approval of our Business Combination and we do not conduct redemptions in connection with our 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.” However, we would not be restricting our
stockholders’ ability to vote all of their shares (including Excess Shares) for or against our Business Combination. Your inability
to redeem the Excess Shares will reduce your influence over our ability to complete our 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 Business Combination. And as a result, you will continue to hold that number of
shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially
at a loss.
If
the net proceeds of our IPO not being held in the trust account are insufficient to allow us to operate for at least the next 12 months
(or up to 24 months from the closing of our IPO if we extend the period of time to consummate a Business Combination), we may be unable
to complete our Business Combination.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the next 12 months (or up
to 24 months from the closing of our IPO if we extend the period of time to consummate a Business Combination), assuming that our Business
Combination is not completed during that time. We expect to incur significant costs in pursuit of our acquisition plans. We may need
to borrow funds from our founders, officers or directors or their affiliates to operate or may be forced to liquidate. Our founders,
officers, directors and their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever
amount that they deem reasonable in their sole discretion for our working capital needs. Each working capital loan would be evidenced
by a promissory note. The working capital notes would either be paid upon consummation of our Initial Business Combination, without interest,
or, at holder’s discretion, an amount not to exceed $1,500,000, may be converted into working capital units at a price of $10.00
per unit, which units would be identical to the private placement units. with an exercise price of $11.50 per share. We may not be able
to raise additional financing from unaffiliated parties necessary to fund our expenses. Any such event in the future may negatively impact
the analysis regarding our ability to continue as a going concern at such time.
We
believe that, upon the closing of our IPO, the funds available to us outside of the trust account, will be sufficient to allow us to
operate for at least the next 12 months (or up to 24 months from the closing of our IPO if we extend the period of time to consummate
a Business Combination); however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion
of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion
of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target
businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses)
with respect to a particular proposed Business Combination, although we do not have any current intention to do so. If we entered into
a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit
such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct
due diligence with respect to, a target business. If we are unable to complete our Business Combination, our public stockholders may
receive only approximately $10.15 per share (or less in certain circumstances) on the liquidation of our trust account and our warrants
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.15 per share on the redemption of
their shares. 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 $10.15 per share.
If
the net proceeds of our IPO and the sale of the private placement units not being held in the trust account are insufficient, it could
limit the amount available to fund our search for a target business or businesses and complete our Business Combination and we will depend
on loans from our Sponsor or management team to fund our search, to pay our taxes and to complete our Business Combination.
Of
the net proceeds of our IPO and the sale of the private placement units and after payment of estimated offering expenses, only approximately
$950,000 was available to us initially outside the trust account to fund our working capital requirements. In the event that our offering
expenses exceed our estimate of approximately $451,435, we may fund such excess with funds not held in the trust account. In such case,
the amount of funds available for working capital purposes would decrease by a corresponding amount. The amount held in the trust account
will not be impacted as a result of such increase or decrease. Conversely, in the event that the offering expenses are less than our
estimate of $451,435, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. 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. Neither 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 Business Combination. Up to $1,500,000 of such loans may be convertible into units, at a
price of $10.00 per unit at the option of the lender, upon consummation of our Initial Business Combination. The units would be identical
to the placement units. Prior to the completion of our Initial Business Combination, we do not expect to seek loans from parties other
than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver
against any and all rights to seek access to funds in our trust account. If we are unable to obtain these loans, we may be unable to
complete our Initial Business Combination. If we are unable to complete our 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 $10.15 per share (or less in certain circumstances) on our redemption of our public shares, and our warrants will
expire worthless. In certain circumstances, our public stockholders may receive less than $10.15 per share on the redemption of their
shares. 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 $10.15 per share.
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 $10.15 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 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,
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. Further, a court may not uphold the validity of such agreements. Making
such a request of potential target businesses may make our acquisition proposal less attractive to them and, to the extent prospective
target businesses refuse to execute such a waiver, it may limit the field of potential target businesses that we might pursue.
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 Genesis Unicorn Capital Corp. 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 Business
Combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our Business Combination,
we will be required to provide for payment of claims of creditors that were not waived that may be brought against us. Accordingly,
the per-share redemption amount received by public stockholders could be less than the $10.15 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) $10.15
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 $10.15 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability
will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies
held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters
of our 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 cannot assure you that our
Sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including,
without limitation, claims by vendors and prospective target businesses. Therefore, the per-share distribution from the trust account
may be less than $10.15, plus interest, due to such claims.
Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which 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 may not be able to return to our public stockholders at least $10.15.
We
may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We
have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have
agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against
the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i)
we have sufficient funds outside of the trust account or (ii) we consummate an Initial Business Combination. Our obligation to indemnify
our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their
fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and
directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s
investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors
pursuant to these indemnification provisions.
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 shareholders.
In
the event that the proceeds in the trust account are reduced below $10.15 per public share 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 may choose not to do so in any particular instance.
For example, the cost of such legal action may be deemed by the independent directors to be too high relative to the amount recoverable
or the independent directors may determine that a favorable outcome is not likely. 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 $10.15 per share.
If,
after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our Board
of Directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our Board of Directors
and us to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover 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 shareholders, 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
shareholders and the per-share amount that would otherwise be received by our shareholders 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 Business Combination.
A
company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business
of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment
Company Act, as amended, or the Investment Company Act. Since we will invest the proceeds held in the trust account, it is possible that
we could be deemed an investment company. If we are deemed to be an investment company under the Investment Company Act, our activities
may be restricted, including:
| |
● |
restrictions
on the nature of our investments; and |
| |
|
|
| |
● |
restrictions
on the issuance of securities; |
| |
|
|
| |
each
of which may make it difficult for us to complete our Business Combination. |
| |
|
| |
In
addition, we may have imposed upon us burdensome requirements, including: |
| |
|
| |
● |
registration
as an investment company; |
| |
|
|
| |
● |
adoption
of a specific form of corporate structure; and |
| |
|
|
| |
● |
reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations. |
| |
|
|
| |
Compliance
with these additional regulatory burdens would require additional expense for which we have not allotted. |
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 anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held
in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust
agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these
instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and
selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company”
within the meaning of the Investment Company Act. 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 $10.15 per share on the liquidation of our trust account and our warrants will expire worthless.
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 $10.15 per share.
The
proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 180 days or less
or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S.
government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they
have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in
recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt
similar policies in the United States. In the event that we are unable to complete our Initial Business Combination or make certain amendments
to our amended and restated certificate of incorporation, our public stockholders are entitled to receive their pro-rata share of the
proceeds held in the trust account, plus any interest income, net of taxes paid or payable (less, in the case we are unable to complete
our Initial Business Combination, $50,000 of interest). Negative interest rates could reduce the value of the assets held in trust such
that the per-share redemption amount received by public stockholders may be less than $10.15 per share.
If
we are unable to consummate our Business Combination within 12 months (or up to 24 months from the closing of our IPO if we extend the
period of time to consummate a Business Combination) of the closing of our IPO, our public shareholders may be forced to wait beyond
such 12 months (or up to 24 months) before redemption from our trust account.
If
we are unable to consummate our Business Combination within 12 months from the closing of our IPO (or up to 24 months from the closing
of our IPO if we extend the period of time to consummate a Business Combination), we will distribute the aggregate amount then on deposit
in the trust account (less the net interest earned thereon to pay dissolution expenses), pro rata to our public stockholders by way of
redemption and cease all operations except for the purposes of winding up of our affairs, as further described herein. If we are required
to windup, liquidate the trust account and distribute such amount therein, pro rata, to our public stockholders, as part of any liquidation
process, such winding up, liquidation and distribution must comply with the applicable provisions of applicable Delaware law. In that
case, investors may be forced to wait beyond the 12 months (or up to 24 months if we extend) before the redemption proceeds of our trust
account become available to them and they receive the return of their pro rata portion of the proceeds from our trust account. Only after
the expiration of this full time period will public security holders be entitled to distributions from the trust account if we are unable
to complete a Business Combination. Accordingly, investors’ funds may be unavailable to them until after such date and to liquidate
your investment, public security holders may be forced to sell their public shares or warrants, potentially at a loss. We have no obligation
to return funds to investors prior to the date of our redemption or liquidation unless we consummate our Business Combination prior thereto
and only then in cases where investors have sought to redeem their shares of common stock. Only upon our redemption or any liquidation
will public stockholders be entitled to distributions if we are unable to complete our Business Combination.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them.
Under
the Delaware General Corporation Law, or the DGCL, stockholders may be held liable for claims by third parties against a corporation
to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public
stockholders upon the redemption of our public shares in the event we do not complete our Initial Business Combination within the required
time period may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth
in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice
period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject
any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability
of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the
claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary
of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following the twelfth (12th)
month from the closing of our IPO (or the end of any extension period) in the event we do not complete our Initial Business Combination
and, therefore, we do not intend to comply with the foregoing procedures.
Because
we do not intend to comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such
time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, consultants, 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 within the required time period is not considered a liquidating distribution under
Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations
for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of
a liquidating distribution.
We
may not hold an annual meeting of shareholders until after the consummation of our Business Combination.
The
Nasdaq corporate governance requirements do not require us to hold an annual meeting until the first anniversary of our first fiscal
year end following our listing on Nasdaq. We may not hold an annual meeting of stockholders until after we consummate our Initial Business
Combination and thus may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held
for the purposes of electing directors in accordance with a company’s bylaws unless such election is made by written consent in
lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to our 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. Until we hold an annual meeting of stockholders, public stockholders may not be afforded the opportunity
to discuss company affairs with Management.
Holders
of public warrants will not have redemption rights with respect to such securities.
If
we are unable to complete an Initial Business Combination within the required time period and the funds held in the trust account are redeemed,
the public warrants will expire and holders of such securities will not receive any of the amounts held in the trust account in exchange
for their public warrants.
The
grant of registration rights to our Sponsor and holders of our private placement units may make it more difficult to complete our Business
Combination, and the future exercise of such rights may adversely affect the market price of our shares of common stock.
We
entered into a registration rights agreement with our Sponsor and our other initial stockholders, pursuant to which such persons and
their permitted transferees can demand that we register their founder shares, the private shares, the private placement warrants, the
shares underlying such warrants, and any units we may issue 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 shares of common stock. In addition, the existence of the registration rights may make our
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 shares
of common stock that is expected when the shares owned by our Sponsor, holders of our private placement units or holders of our working
capital loans or their respective permitted transferees are registered.
Because
we are neither limited to evaluating target businesses in a particular industry, sector or geographic area nor have we selected any specific
target businesses with which to pursue our Initial Business Combination, you will be unable to ascertain the merits or risks of any particular
target business’s operations.
We
may seek to complete a Business Combination with an operating company in any industry, sector or geographic area. However, we will not,
under our amended and restated certificate of incorporation, be permitted to effectuate our Initial Business Combination solely with
another blank check company or similar company with nominal operations. Because we have not yet selected or approached any specific target
business with respect to a Business Combination, there is no basis to evaluate the possible merits or risks of any particular target
business’s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete
our Initial Business Combination, we may be affected by numerous risks inherent in the business operations with which we combine. For
example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be
affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers
and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly
ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some
of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely
impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors
than a direct investment, if such opportunity were available, in a Business Combination target. Accordingly, any stockholders or warrant
holders who choose to remain a stockholder or warrant holder following our Initial Business Combination could suffer a reduction in the
value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value.
We
may seek acquisition opportunities in industries or sectors that may be outside of our management’s areas of expertise.
Although
we expect to focus our search for a target business in the healthcare, technology, green economy and consumer products sectors, we will
consider a Business Combination outside of our management’s areas of expertise if a Business Combination candidate is presented
to us and we determine that such candidate offers an attractive acquisition opportunity for our Company. In the event we elect to pursue
an acquisition outside of the areas of management’s expertise, our management’s expertise may not be directly applicable
to its evaluation or operation, and the information contained in this report regarding the areas of our management’s expertise
would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately
ascertain or assess all of the significant risk factors. Accordingly, any stockholders who choose to remain stockholders following our
Business Combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such
reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may
enter into our Business Combination with a target that does not meet such criteria and guidelines, and as a result, the target business
with which we enter into our Business Combination may not have attributes entirely consistent with our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business
with which we enter into our Business Combination will not have all of these positive attributes. If we complete our Business Combination
with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business
that does meet all of our general criteria and guidelines. In addition, if we announce a prospective Business Combination with a target
that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which
may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain
amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval
for business or other legal reasons, it may be more difficult for us to attain stockholder approval of our Business Combination if the
target business does not meet our general criteria and guidelines. If we are unable to complete our Business Combination, our public
stockholders may receive only approximately $10.15 per share on the liquidation of our trust account and our warrants will expire worthless.
If
we do not conduct an adequate due diligence investigation of a target business, we may be required to subsequently 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.
We
must conduct a due diligence investigation of the target businesses we intend to acquire. Intensive due diligence is time consuming and
expensive due to the operations, accounting, finance and legal professionals who must be involved in the due diligence process. Even
if we conduct extensive due diligence on a target business, this diligence may not reveal all material issues that may affect 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 the control of the target business and outside of our control may later arise. If our diligence fails to identify issues specific
to a target business, industry or the environment in which the target business operates, 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 shares of common stock.
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 post-combination debt financing. Accordingly, any stockholders
who choose to remain stockholders following the Business Combination could suffer a reduction in the value of their shares. Such stockholders
are unlikely to have a remedy for such reduction in value.
We
may seek acquisition opportunities with a financially unstable business or an entity lacking an established record of revenue or earnings.
To
the extent we complete our Business Combination with a financially unstable business or an entity lacking an established record of sales
or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include
volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor
to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant
risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control
and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may
be more competition for attractive targets. This could increase the cost of our Initial Business Combination and could even result in
our inability to find a target or to consummate an Initial Business Combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets
for special purpose acquisition companies have already entered into an Initial Business Combination, and there are still many special
purpose acquisition companies seeking targets for their Initial Business Combination, as well as many such companies currently in registration.
As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify
a suitable target and to consummate an Initial Business Combination. In addition, because there are more special purpose acquisition
companies seeking to enter into an Initial Business Combination with available targets, the competition for available targets with attractive
fundamentals or business models may increase, which could cause target companies to demand improved financial terms.
Attractive
deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions, or increases
in the cost of additional capital needed to close Business Combinations or operate targets post-Business Combination. This could increase
the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an Initial Business Combination, and may result
in our inability to consummate an Initial Business Combination on terms favorable to our investors altogether.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
Business Combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a Business Combination meeting certain financial significance
tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement
disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial
statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United
States of America, or U.S. GAAP, or international financing reporting standards as issued by the International Accounting Standards Board,
or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the
standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit
the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to
disclose such statements in accordance with federal proxy rules and complete our Business Combination within the prescribed time frame.
We
are not required to obtain an opinion from an independent investment banking or from an independent accounting firm, and consequently,
you may have no assurance from an independent source that the price we are paying for the business is fair to our Company from a financial
point of view.
Unless
we complete our Business Combination with an affiliated entity, or our Board of Directors cannot independently determine the fair market
value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm, another
independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or from an independent accounting
firm that the price we are paying for a target is fair to our company from a financial point of view. If no opinion is obtained, our
stockholders will be relying on the business judgment of our Board of Directors, which will have significant discretion in choosing the
standard used to establish the fair market value of the target or targets, and different methods of valuation may vary greatly in outcome
from one another. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable,
related to our Business Combination. However, if our Board of Directors is unable to determine the fair value of an entity with which
we seek to complete a Business Combination based on such standards, we will be required to obtain an opinion as described above.
We
may issue shares of our capital stock or debt securities to complete a Business Combination, which would reduce the equity interest of
our stockholders and could cause a change in control of our ownership. We may also issue shares of Class A common stock upon the conversion
of the Class B common stock at a ratio greater than one-to-one at the time of the consummation of our Initial Business Combination as
a result of the anti-dilution provisions contained in our amended and restated certificate of incorporation. Any such issuances would
dilute the interest of our stockholders and likely present other risks.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 125,000,000 shares of Class A common stock, $0.0001
par value per share, 12,500,000 shares of Class B common stock, $0.0001 par value per share and 1,250,000 shares of preferred stock,
$0.0001 par value. As of March 8, 2023, we have (i) 119,132,485 authorized but unissued shares of Class A common stock available for issuance
(after appropriate reservation for the issuance of the shares underlying the public and private warrants and the outstanding shares of
Class B common stock, but excluding any working capital units) and (ii) 10,343,750 authorized but unissued shares of Class B common stock
available for issuance. Although we have no commitment as of the date of this report, we may issue a substantial number of additional
shares of common stock or preferred stock, or a combination of shares of common stock and preferred stock, to obtain additional working
capital or to complete a Business Combination. Shares of Class B common stock are convertible into shares of our Class A common stock
initially at a one-for-one ratio but subject to adjustment as set forth herein, including in certain circumstances in which we issue
Class A common stock or equity-linked securities related to our Initial Business Combination.
We
may issue a substantial number of additional shares of common or preferred stock to complete our Initial Business Combination or under
an employee incentive plan after completion of our Initial Business Combination (although our amended and restated certificate of incorporation
will provide that we may not issue securities that can vote with common stockholders on matters related to our pre-Initial Business Combination
activity). We may also issue shares of Class A common stock upon conversion of the Class B common stock at a ratio greater than one-to-one
at the time of the consummation of our Initial Business Combination as a result of the anti-dilution provisions contained in our amended
and restated certificate of incorporation. However, our amended and restated certificate of incorporation will provide, among other things,
that prior to our Initial Business Combination, we may not issue additional shares of capital stock that would entitle the holders thereof
to (i) receive funds from the trust account or (ii) vote on any Initial Business Combination. These provisions of our amended and restated
certificate of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with the approval
of our stockholders. However, our executive officers, directors and director nominees have agreed, pursuant to a written agreement with
us, that they will not propose any amendment to our amended and restated certificate of incorporation (A) to modify the substance or
timing of our obligation to allow redemption in connection with our Initial Business Combination or certain amendments to our amended
and restated certificate of incorporation prior thereto or to redeem 100% of our public shares if we do not complete an Initial Business
Combination within 12 months from the closing of our IPO (or up to 18 months from the closing of our IPO if extended) or (B) with respect
to any other provision relating to stockholders’ rights or pre-Initial Business Combination activity, unless we provide our public
stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes
payable), divided by the number of then outstanding public shares.
The
issuance of additional shares of common stock or preferred stock will not reduce the per-share redemption amount in the trust account,
but:
| |
● |
may
significantly dilute the equity interest of investors in our IPO, which dilution would increase if the anti-dilution provisions in
the Class B common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class
B common stock; |
| |
● |
may
subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded
to our shares of common stock; |
| |
|
|
| |
● |
may
cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers
and directors; and |
| |
|
|
| |
● |
may
adversely affect prevailing market prices for our shares of common stock. |
Similarly,
if we issue debt securities, it could result in:
| |
● |
default
and foreclosure on our assets if our operating revenues after a Business Combination are insufficient to repay our debt obligations; |
| |
|
|
| |
● |
acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants
that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| |
|
|
| |
● |
our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and |
| |
|
|
| |
● |
our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such
financing while the debt security is outstanding. |
| |
|
|
| |
● |
our
inability to pay dividends on our common stock; |
| |
|
|
| |
● |
using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
| |
|
|
| |
● |
limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| |
|
|
| |
● |
increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
and |
| |
|
|
| |
● |
limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution
of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
If
we incur indebtedness, our lenders will not have a claim on the cash in the trust account and such indebtedness will not decrease the
per-share redemption amount in the trust account.
We
may reincorporate in another jurisdiction in connection with our Business Combination and such reincorporation may result in taxes imposed
on shareholders.
We
may, in connection with our Business Combination and subject to requisite stockholder approval under Delaware law, reincorporate in the
jurisdiction in which the target company or business is located. The transaction may require a stockholder to recognize taxable income
in the jurisdiction in which the stockholder is a tax resident or in which its members are resident if it is a tax transparent entity.
We do not intend to make any cash distributions to stockholders to pay such taxes. Stockholders may be subject to withholding taxes or
other taxes with respect to their ownership of us after the reincorporation.
Resources
could be spent in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business. If we are unable to complete our Business Combination, our public shareholders may receive
only approximately $10.15 per share, or less than such amount in certain circumstances, on the liquidation of our trust account and our
warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If we decide not to complete a specific Business Combination, the costs incurred up to that point for the proposed
transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail
to complete our Business Combination for any number of reasons including those beyond our control. Any such event will result in a loss
to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another
business. If we are unable to complete our Business Combination, our public stockholders may receive only approximately $10.15 per share
on the liquidation of our trust account and our warrants will expire worthless.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a Business Combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we presently have no commitments to issue any notes or other debt securities, or to otherwise incur outstanding debt following our IPO,
we may choose to incur substantial debt to complete our Business Combination. We have agreed that we will not incur any indebtedness
unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust
account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust account. Nevertheless,
the incurrence of debt could have a variety of negative effects, including:
●
default and foreclosure on our assets if our operating revenues after an Business Combination are insufficient to repay our debt obligations;
●
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
●
our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
●
our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such
financing while the debt security is outstanding;
●
our inability to pay dividends on our shares of common stock;
●
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our shares of common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
●
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
●
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government
regulation; and
●
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements,
execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
We
may only be able to complete one Business Combination with the proceeds of our IPO and the sale of the private placement units, which
will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification
may negatively impact our operations and profitability.
Of
the net proceeds from our IPO and the sale of the private placement units, $55,566,189 is available to complete our Business Combination
and pay related fees and expenses. We may effectuate our Business Combination with a single target business or multiple target businesses
simultaneously or within a short period of time. However, we may not be able to effectuate our Business Combination with more than one
target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare
and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses
as if they had been operated on a combined basis. By completing our Business Combination with only a single entity our lack of diversification
may subject us to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit
from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several
Business Combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may
be:
●
solely dependent upon the performance of a single business, property or asset; or
●
dependent upon the development or market acceptance of a single or limited number of products, processes or services.
This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial
adverse impact upon the particular industry in which we may operate subsequent to our Business Combination.
We
may attempt to simultaneously complete Business Combinations with multiple prospective targets, which may hinder our ability to complete
our Business Combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other Business Combinations, which may make
it more difficult for us, and delay our ability, to complete our Business Combination. With multiple Business Combinations, we could
also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations
(if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or
products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively
impact our profitability and results of operations.
We
may attempt to complete our Business Combination with a private company about which little information is available, which may result
in a Business Combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our Business Combination with a privately held company. Very little public
information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential
Business Combination on the basis of limited information, which may result in a Business Combination with a company that is not as profitable
as we suspected, if at all.
Our
initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not
support.
Upon
the closing of our IPO, our initial stockholders own shares representing approximately 31.58% of our issued and outstanding shares of
common stock (including the placement shares to be issued to the sponsor and assuming they did not purchase any units in our IPO). Accordingly,
they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including
amendments to our amended and restated certificate of incorporation and approval of major corporate transactions. If our initial stockholders
had purchased any units in our IPO or if our initial stockholders purchase any additional shares of common stock in the aftermarket or
in privately negotiated transactions, this would increase their control. Factors that would be considered in making such additional purchases
would include consideration of the current trading price of our Class A common stock. In addition, our board of directors, whose members
were elected by our Initial stockholders, is and will be divided into two classes, each of which will generally serve for a term of two
years with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors
prior to the completion of our Initial Business Combination, in which case all of the current directors will continue in office until
at least the completion of the Initial Business Combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election and our Initial stockholders, because of
their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue
to exert control at least until the completion of our Initial Business Combination.
Risks
Relating to our Management and Directors
Our
ability to successfully effect a Business Combination and to be successful thereafter will be totally dependent upon the efforts of our
key personnel, some of whom may join us following a Business Combination. While we intend to closely scrutinize any individuals we engage
after a Business Combination, we cannot assure you that our assessment of these individuals will prove to be correct. Further, the loss
of key personnel could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect a Business Combination is dependent upon the efforts of our key personnel. We believe that our success
depends on the continued service of our key personnel, at least until we have consummated our initial Business Combination. We cannot
assure you that any of our key personnel will remain with us for the immediate or foreseeable future, either due to health conditions
or otherwise. In addition, none of our officers is required to commit any specified amount of time to our affairs and, accordingly, our
officers will have conflicts of interest in allocating Management time among various business activities, including identifying potential
Business Combinations and monitoring the related due diligence. We do not have employment agreements with, or key-man insurance on the
life of, any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect on us.
The
role of our key personnel after a Business Combination, however, cannot presently be ascertained. Although some of our key personnel
may serve in senior management or as members of the Board of Directors or advisory positions following a Business Combination, it is
likely that most, if not all, of the management of the target business will remain in place. While we intend to closely scrutinize any
individuals we engage after a Business Combination, we cannot assure you that our assessment of these individuals will prove to be correct.
These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend time and
resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory
issues which may adversely affect our operations.
We
are dependent upon our officers and directors and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, Mr. Lui and our other officers and directors.
We believe that our success depends on the continued service of our officers and directors, at least until we have completed our Business
Combination. In addition, our officers and directors are not required to commit any specified amount of time to our affairs and, accordingly,
will have conflicts of interest in allocating management time among various business activities, including identifying potential Business
Combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the life
of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental
effect on us.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular Business Combination.
These agreements may provide for them to receive compensation following our Business Combination and as a result, may cause them to have
conflicts of interest in determining whether a particular Business Combination is the most advantageous.
Our
key personnel may be able to remain with the company after the completion of our Business Combination only if they are able to negotiate
employment or consulting agreements in connection with the Business Combination. Such negotiations would take place simultaneously with
the negotiation of the Business Combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to us after the completion of the Business Combination. The personal and financial
interests of such individuals may influence their motivation in identifying and selecting a target business, subject to his or her fiduciary
duties under Delaware law. However, we believe the ability of such individuals to remain with us after the completion of our Business
Combination will not be the determining factor in our decision as to whether or not we will proceed with any potential Business Combination.
There is no certainty, however, that any of our key personnel will remain with us after the completion of our Business Combination. We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination as
to whether any of our key personnel will remain with us will be made at the time of our Business Combination.
Our
officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business
we may seek to acquire.
We
may consummate a Business Combination with a target business in any geographic location or industry we choose. We cannot assure you that
our officers and directors will have enough experience or have sufficient knowledge relating to the jurisdiction of the target or its
industry to make an informed decision regarding a Business Combination.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may effect our Business Combination
with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When
evaluating the desirability of effecting our Business Combination with a prospective target business, our ability to assess the target
business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the
target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities
we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company,
the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose
to remain stockholders following the 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.
The
officers and directors of an acquisition candidate may resign upon completion of our Business Combination. The departure of a Business
Combination target’s key personnel could negatively impact the operations and profitability of our post-combination business. The
role of an acquisition candidates’ key personnel upon the completion of our Business Combination cannot be ascertained at this
time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the
acquisition candidate following our Business Combination, it is possible that members of the management of an acquisition candidate will
not wish to remain in place. As a result, we may need to reconstitute the Management team of the post-transaction company in connection
with our Initial Business Combination, which may adversely impact our ability to complete an acquisition in a timely manner or at all.
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to
how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our Business
Combination.
Our
officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest
in allocating their time between our operations and our search for a Business Combination and their other businesses. We do not intend
to have any full-time employees prior to the completion of our Business Combination. Each of our officers is engaged in several other
business endeavors for which he or she may be entitled to substantial compensation and our officers are not obligated to contribute any
specific number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities.
If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs
in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact
on our ability to complete our Business Combination.
Certain
of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities
similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular
business opportunity should be presented.
Following
the completion of our IPO and until we consummate our Business Combination, we intend to engage in the business of identifying and combining
with one or more businesses. Our Sponsor and officers and directors are, or may in the future become, affiliated with other blank check
companies like ours or other entities (such as operating companies or investment vehicles) that are engaged in making and managing investments
in a similar business.
Our
officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other
entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to
which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential
target business may be presented to other entities prior to its presentation to us, subject to his or her fiduciary duties under applicable
law.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or
have an interest. In fact, we may enter into a Business Combination with a target business that is affiliated with our Sponsor, our directors
or officers, although we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from engaging for
their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between
their interests and ours.
Our
Sponsor, officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for
a Business Combination.
Our
Sponsor and officers and directors have waived their right to redeem their Sponsor shares or any other shares purchased in the IPO or
thereafter, or to receive distributions from the trust account with respect to their Sponsor shares upon our liquidation if we are unable
to consummate a Business Combination. Accordingly, the shares and any private units will be worthless if we do not consummate a Business
Combination. The personal and financial interests of our directors and officers may influence their motivation in timely identifying
and selecting a target business and completing a Business Combination. Consequently, our directors’ and officers’ discretion
in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions
and timing of a particular Business Combination are appropriate and, in our stockholders’, best interest. This risk may become
more acute as the deadline for completing our Initial Business Combination nears.
Our
officers and directors or their affiliates have pre-existing fiduciary and contractual obligations and accordingly, may have conflicts
of interest in determining to which entity a particular business opportunity should be presented.
Our
officers and directors or their affiliates have pre-existing fiduciary and contractual obligations to other companies. Accordingly, they
may participate in transactions and have obligations that may be in conflict or competition with our consummation of our Initial Business
Combination. Additionally, a potential target business may be presented by our management team to another entity prior to its presentation
to us and we may not be afforded the opportunity to engage in a transaction with such target business. Our amended and restated certificate
of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one
we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Accordingly, if any of our
officers or directors becomes aware of a Business Combination opportunity which is suitable for one or more entities to which he or she
has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such Business
Combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines
to present the opportunity to us.
These
conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation
to us. For a more detailed description of the pre-existing fiduciary and contractual obligations of our Management — Conflicts
of Interest.”
Our
officers and directors and their affiliates will control a substantial interest in us and thus may influence certain actions requiring
a stockholder vote.
As
of the date of this annual report, our Sponsor, officers and directors and their affiliates owned approximately 31.58% of our issued
and outstanding shares of common stock (excluding accounting for any private warrants). Further, our Sponsor, officers, directors or
their affiliates could determine in the future to purchase our securities in the open market or in private transactions, to the extent
permitted by law, to increase their holdings in order to influence the vote or magnitude of the number of stockholders seeking to tender
their shares to us. If we are unable to complete our Initial Business Combination, our public stockholders may receive only approximately
$10.15 per share, or less in certain circumstances, on the liquidation of our trust account, and our warrants will expire worthless.
In connection with any vote for a proposed Business Combination, our Sponsor officers and directors have agreed to vote their Sponsor
shares, as well as any public shares acquired in or after our IPO in favor of any proposed Business Combination.
Past
performance by members of our management team and their respective affiliates may not be indicative of future performance of an investment
in us.
Information
regarding performance by, or businesses associated with, members of our management team and their respective affiliates, is presented
for informational purposes only. Any past experience and performance, including related to acquisitions, of members of our management
team and their respective affiliates, is not a guarantee either: (1) that we will be able to successfully identify a suitable candidate
for our Initial Business Combination; or (2) of any results with respect to any Initial Business Combination we may consummate. You should
not rely on the historical record of our management team’s or their affiliates’ performance, as indicative of the future
performance of an investment in us or the returns we will, or are likely to, generate going forward.
Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our
interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or
have an interest. In fact, we may enter into a Business Combination with a target business that is affiliated with one or more of our
Sponsors, directors or officers. We do not have a policy that expressly prohibits any such persons from engaging for their own account
in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests
and ours.
We
may engage in a Business Combination with one or more target businesses that have relationships with entities that may be affiliated
with our Sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our initial stockholders, officers and directors, and their affiliates with other businesses, we may decide
to acquire one or more businesses affiliated with or competitive with our initial stockholders, officers and directors, and their respective
affiliates. Our directors also serve as officers and/or board members for other entities. Such entities may compete with us for Business
Combination opportunities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities,
we would pursue such a transaction if we determined that such affiliated entity met our criteria for a Business Combination and such
transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from
an independent investment banking firm or from an independent accounting firm, regarding the fairness to our company from a financial
point of view of a Business Combination with one or more domestic or international businesses affiliated with our Sponsors, officers
or directors, potential conflicts of interest still may exist and, as a result, the terms of the Business Combination may not be as advantageous
to our public stockholders as they would be absent any conflicts of interest.
Moreover,
we may, at our option, pursue an affiliated joint acquisition opportunity with an initial stockholder or one of their affiliates or with
other entities to which an officer or director has a fiduciary, contractual or other obligation or duty. Any such parties may co-invest
with us in the target business at the time of our Initial Business Combination, or we could raise additional proceeds to complete the
acquisition by making a future issuance of securities to any such parties, which may give rise to certain conflicts of interest.
Since
our Sponsor, officers and directors will lose their entire investment in us if our Business Combination is not completed, a conflict
of interest may arise in determining whether a particular Business Combination target is appropriate for our Business Combination.
Prior
to the completion of our IPO, the Company had issued an aggregate of 2,875,000 shares of Class B common stock (Founder Shares) to the
Sponsor for an aggregate purchase price of $25,000 in cash. In March and October 2021, our Sponsor transferred an aggregate of 203,000
Founder Sharers to our officers, directors and advisors. On November 19, 2021, the Company canceled 718,750 Founder Shares due to a downsize
of our IPO, which cancellation was effective retroactively. Accordingly, there are currently an aggregate of 2,156,250 Founder Shares
issued and outstanding. The Founder Shares will be worthless if we do not complete a Business Combination. In addition, our Sponsor has
purchased an aggregate of 377,331 private placement units, for a purchase price of $3,773,310, or $10.00 per unit, that will also be
worthless if we do not complete a Business Combination.
The
Founder Shares are identical to the shares of common stock included in the units being sold in our IPO except that (i) the Founder Shares
are shares of Class B common stock that automatically convert into shares of our Class A common stock at the time of consummation of
our Initial Business Combination, on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights; (ii) the founder
shares are subject to certain transfer restrictions; and (iii) our Sponsor, officers and directors have entered into a letter agreement
with us, pursuant to which they have agreed (A) to waive their redemption rights with respect to their Founder Shares, private placement
shares and public shares in connection with the completion of our Business Combination, (B) to waive their redemption rights with respect
to any Founder Shares, private placement shares and public shares held by them in connection with a stockholder vote to approve an amendment
to our amended and restated certificate of incorporation (x) to modify the substance or timing of our obligation to provide for the redemption
of our public shares in connection with an Business Combination or to redeem 100% of our public shares if we have not consummated our
Business Combination within the timeframe set forth therein or (y) with respect to any other provision relating to stockholders’
rights or pre-Business Combination activity and (C) to waive their rights to liquidating distributions from the trust account with respect
to their Founder Shares and private placement shares if we fail to complete our Business Combination within 12 months from the closing
of our IPO (or up to 24 months from the closing of our IPO if we extend the period of time to consummate a Business Combination) (although
they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete
our Business Combination within the prescribed time frame).
The
personal and financial interests of our officers and directors may influence their motivation in identifying and selecting a target Business
Combination, completing a Business Combination, and influencing the operation of the business following the Business Combination.
Since
our Sponsor, officers and directors may not be eligible to be reimbursed for their out-of-pocket expenses if our Business Combination
is not completed, a conflict of interest may arise in determining whether a particular Business Combination target is appropriate for
our Business Combination.
At
the closing of our Business Combination, our Sponsor, officers and directors, or any of their respective affiliates, will be reimbursed
for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and
performing due diligence on suitable Business Combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses
incurred in connection with activities on our behalf. These financial interests of our Sponsor, officers and directors may influence
their motivation in identifying and selecting a target Business Combination and completing an Business Combination.
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. Fewer insurance companies are offering quotes for directors’ and officers’ liability coverage, the premiums charged
for such policies have generally increased and the terms of such policies have generally become less favorable. 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 may need to purchase
additional insurance with respect to any such claims (“run-off insurance”). The need for run-off insurance would be an added
expense for the post-Business Combination entity, and could interfere with or frustrate our ability to consummate an Initial Business
Combination on terms favorable to our investors.
Risks
Relating to the Post-Business Combination Company
Our
Management may not have control of a target business after our Initial Business Combination. We cannot provide assurance that new Management
will possess the skills, qualifications or abilities necessary to profitably operate such business.
We
may structure our Initial Business Combination so that the post-transaction company in which our public stockholders own shares will
own less than 100% of the equity interests or assets of a target business, but we will only complete such Business Combination if the
post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling
interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We
will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting
securities of the target, our stockholders prior to our Initial Business Combination may collectively own a minority interest in the
post Business Combination company, depending on valuations ascribed to the target and us in the Business Combination. For example, we
could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of the outstanding
capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial
number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding
shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings
resulting in a single person or group obtaining a larger share of the company’s shares than we initially acquired. Accordingly,
this may make it more likely that our Management will not be able to maintain control of the target business.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete
our Initial Business Combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation will not provide a specified maximum redemption threshold, except that in no event
will we redeem, upon our Initial Business Combination, our public shares in an amount that would cause our net tangible assets to be
less than $5,000,001, nor will we consummate our Initial Business Combination if we would otherwise become subject to the SEC’s
“penny stock” rules. As a result, we may be able to complete our Initial Business Combination even though a substantial majority
of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our
Initial Business Combination and do not conduct redemptions in connection with our Initial Business Combination pursuant to the tender
offer rules, have entered into privately negotiated agreements to sell their shares to our founders, officers, directors, advisors or
any of their respective affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of common
stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed
Business Combination exceed the aggregate amount of cash available to us, we will not complete the Business Combination or redeem any
shares, all shares of common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an
alternate Business Combination (including, potentially, with the same target).
In
order to effectuate an Initial Business Combination, blank check companies have, in the recent past, amended various provisions of their
charters and modified governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend
our amended and restated certificate of incorporation or governing instruments, including our warrant agreement, in a manner that will
make it easier for us to complete our Initial Business Combination that some of our stockholders or warrant holders may not support.
In
order to effectuate an Initial Business Combination, blank check companies have, in the recent past, amended various provisions of their
charters and modified governing instruments, including their warrant agreements. For example, blank check companies have amended the
definition of Business Combination, increased redemption thresholds, extended the time to consummate an Initial Business Combination
and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities.
Amending our amended and restated certificate of incorporation will require the approval of holders of 65% of our common stock, and amending
our warrant agreement will require a vote of holders of at least a majority of the public warrants (which may include public units acquired
by our sponsor or its affiliates in our IPO or thereafter in the open market). In addition, our amended and restated certificate of incorporation
requires us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment
to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption
in connection with our Initial Business Combination or certain amendments to our amended and restated certificate of incorporation prior
thereto or to redeem 100% of our public shares if we do not complete an Initial Business Combination within 12 months from the closing
of our IPO (or up to 24 months from the closing if extended) or (B) with respect to any other provision relating to stockholders’
rights or pre-Initial Business Combination activity. We cannot assure you that we will not seek to amend our charter or governing instruments
or extend the time to consummate an Initial Business Combination in order to effectuate our Initial Business Combination. To the extent
any such amendment would be deemed to fundamentally change the nature of any of the securities offered through our IPO prospectus, we
would register, or seek an exemption from registration for, the affected securities.
The
provisions of our amended and restated certificate of incorporation that relate to our pre-Business Combination activity (and corresponding
provisions of the agreement governing the release of funds from our trust account), including an amendment to permit us to withdraw funds
from the trust account such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced
or eliminated, may be amended with the approval of holders of at least 65% of our common stock, which is a lower amendment threshold
than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation
and the trust agreement to facilitate the completion of an Initial Business Combination that some of our stockholders may not support.
Our
amended and restated certificate of incorporation will provide that any of its provisions related to pre-Initial Business Combination
activity (including the requirement to deposit proceeds of our IPO and the sale of the placement units into the trust account and not
release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein and
including to permit us to withdraw funds from the trust account such that the per share amount investors will receive upon any redemption
or liquidation is substantially reduced or eliminated) may be amended if approved by holders of at least 65% of our common stock entitled
to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended
if approved by holders of at least 65% of our common stock entitled to vote thereon. In all other instances, our amended and restated
certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject
to applicable provisions of the DGCL or applicable stock exchange rules. We may not issue additional securities that can vote on amendments
to our amended and restated certificate of incorporation. Our initial stockholders, who collectively beneficially own approximately 31.58%
of our common stock upon the closing of our IPO (including the placement shares to be issued to the sponsor and assuming they did not
purchase any units in the IPO), will participate in any vote to amend our amended and restated certificate of incorporation and/or trust
agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our
amended and restated certificate of incorporation which govern our pre-Initial Business Combination behavior more easily than some other
blank check companies, and this may increase our ability to complete an Initial Business Combination with which you do not agree. Our
stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our
Sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our
amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection
with our Initial Business Combination or certain amendments to our amended and restated certificate of incorporation prior thereto or
to redeem 100% of our public shares if we do not complete an Initial Business Combination within 12 months from the closing of our IPO
(or up to 24 months from the closing if extended) or (ii) with respect to any other provision relating to stockholders’ rights
or pre-Initial Business Combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of
Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the trust account, divided by the number of then outstanding public shares. These agreements are contained in a letter agreement
that we have entered into with our Sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries
of, these agreements and, as a result, will not have the ability to pursue remedies against our Sponsor, officers or directors for any
breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action,
subject to applicable law.
Certain
agreements related to our IPO may be amended without stockholder approval.
Certain
agreements, including the letter agreement among us and our initial stockholders, officers and directors and the registration rights
agreement among us and our initial stockholders may be amended without stockholder approval. These agreements contain various provisions,
including transfer restrictions on our Sponsor shares and private placement units and the securities included therein, that our public
stockholders might deem to be material. While we do not expect our board of directors to approve any amendment to any of these agreements
prior to our Initial Business Combination, it may be possible that our board of directors, in exercising its business judgment and subject
to its fiduciary duties, chooses to approve one or more amendments to any such agreement in connection with the consummation of our Initial
Business Combination. Any such amendments would not require approval from our stockholders, may result in the completion of our Initial
Business Combination that may not otherwise have been possible, and may have an adverse effect on the value of an investment in our securities.
We
may be unable to obtain additional financing to complete our Business Combination or to fund the operations and growth of a target business,
which could compel us to restructure or abandon a particular Business Combination.
Although
we believe that the net proceeds of our IPO and the sale of the private placement units will be sufficient to allow us to complete our
Business Combination, because we have not yet identified any prospective target business we cannot ascertain the capital requirements
for any particular transaction. If the net proceeds of our IPO and the sale of the private placement units prove to be insufficient,
either because of the size of our Business Combination, the depletion of the available net proceeds in search of a target business, the
obligation to redeem for cash a significant number of shares from stockholders who elect redemption in connection with our Business Combination
or the terms of negotiated transactions to purchase shares in connection with our Business Combination, we may be required to seek additional
financing or to abandon the proposed Business Combination. We cannot assure you that such financing will be available on acceptable terms,
if at all. To the extent that additional financing proves to be unavailable when needed to complete our Business Combination, we would
be compelled to either restructure the transaction or abandon that particular Business Combination and seek an alternative target business
candidate. In addition, even if we do not need additional financing to complete our Business Combination, we may require such financing
to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect
on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide
any financing to us in connection with or after our Business Combination. If we are unable to complete our Business Combination, our
public stockholders may only receive approximately $10.15 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 $10.15 per share on the redemption of their shares.
Risk
Related to Our Securities
We
may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least a majority
of the then outstanding warrants.
Our
warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent,
and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity
or correct any defective provision. The warrant agreement requires the approval by the holders of at least a majority of the then outstanding
warrants in order to make any change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms
of the public warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding public warrants approve
of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least a majority of the then
outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise
price of the warrants, convert the warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period
or decrease the number of shares of our common stock purchasable upon exercise of a warrant.
Our
Sponsor paid an aggregate of $25,000 for the Founder Shares, or approximately $0.012 per Founder Share. As a result of this low initial
price, our Sponsor, its affiliates and our management team stand to make a substantial profit even if an Initial Business Combination
subsequently declines in value or is unprofitable for our public stockholders.
As
a result of the low acquisition cost of our founder shares, our Sponsor, its affiliates and our management team could make a substantial
profit even if we select and consummate an Initial Business Combination with an acquisition target that subsequently declines in value
or is unprofitable for our public stockholders. Thus, such parties may have more of an economic incentive for us to enter into an Initial
Business Combination with a riskier, weaker-performing or financially unstable business, or an entity lacking an established record of
revenues or earnings, than would be the case if such parties had paid the full offering price for their founder shares.
Our
Sponsor paid an aggregate of $25,000 or approximately an average of $0.012 per share, for the Sponsor shares and, accordingly, you will
experience immediate and substantial dilution from the purchase of our shares of common stock.
The
difference between the public offering price per share (allocating all of the unit purchase price to the Class A common stock and none
to the warrants included in the unit) and the pro forma net tangible book value per share of our Class A common stock after the IPO constitutes
the dilution to you and the other investors in the IPO. Our Sponsor acquired the Founder Shares at a nominal price, significantly contributing
to this dilution.
Unlike
many other similarly structured special purpose acquisition companies, our stockholders will receive additional shares of Class A common
stock if we issue shares to consummate an Initial Business Combination.
The
Founder Shares will automatically convert into Class A common stock at the time of the consummation of our Initial Business Combination,
on a one-for-one basis, subject to adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked
securities convertible or exercisable for Class A common stock, are issued or deemed issued in excess of the amounts offered in our IPO
and related to the closing of the Initial Business Combination, the ratio at which Founder Shares shall convert into Class A common stock
will be adjusted so that the number of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate,
on an as-converted basis, 20% of the total number of all outstanding shares of common stock upon completion of the Initial Business Combination,
excluding the placement units and underlying securities, and any shares or equity-linked securities issued, or to be issued, to any seller
in the Business Combination and any private placement-equivalent units and their underlying securities issued to our Sponsor or its affiliates
upon conversion of loans made to us. This is different from most other similarly structured blank check companies in which the Initial
stockholder will only be issued an aggregate of 20% of the total number of shares to be outstanding prior to the Initial Business Combination.
Additionally, the aforementioned adjustment will not take into account any shares of Class A common stock redeemed in connection with
the Business Combination. Accordingly, the holders of the Founder Shares could receive additional shares of Class A common stock even
if the additional shares of Class A common stock, or equity-linked securities convertible or exercisable for Class A common stock, are
issued or deemed issued solely to replace those shares that were redeemed in connection with the Business Combination. The foregoing
may make it more difficult and expensive for us to consummate an Initial Business Combination.
There
is no guarantee that our warrants will be in the money at the time they become exercisable, and they may expire worthless.
The
exercise price for our warrants, including our public warrants, is $11.50 per share of common stock. There is no guarantee that any of
our warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants
may expire worthless.
Our
warrant agreement with our transfer agent will designate the courts of the State of New York or the United States District Court for
the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated
by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our
company.
Our
warrant agreement with our transfer agent, which govern the terms of the warrants, provides that, subject to applicable law, (i) any
action, proceeding or claim against us or the warrant agent arising out of or relating in any way to the warrant agreement shall be brought
and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii)
that we and the warrant agent irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action,
proceeding or claim. We and the warrant agent will waive any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum.
Notwithstanding
the foregoing, this exclusive forum provision shall not apply to suits brought to enforce a duty or liability created by the Exchange
Act, any other claim for which the federal courts have exclusive jurisdiction or any complaint asserting a cause of action arising under
the Securities Act against us or any of our directors, officers, other employees or agents. Section 27 of the Exchange Act creates exclusive
federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations
thereunder. In addition, stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Other
than with respect to claims under the Securities Act or Exchange Act, this choice-of-forum provision may limit a warrant holder’s
ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits.
Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more
of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions,
which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of
the time and resources of our management and board of directors.
A
provision of our warrant agreement for the public warrants may make it more difficult for us to consummate an Initial Business Combination.
Unlike
most blank check companies, if
| |
(i) |
we issue additional shares
of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our Initial Business
Combination at a Newly Issued Price of less than $9.20 per share; |
| |
|
|
| |
(ii) |
the aggregate gross proceeds
from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our
Initial Business Combination on the date of the consummation of our Initial Business Combination (net of redemptions), and |
| |
|
|
| |
(iii) |
the Market Value is below
$9.20 per share, |
then
the exercise price of the warrants will be adjusted to be equal to 115% of the greater of the Market Value and the Newly Issued Price,
and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market
Value and the Newly Issued Price. This may make it more difficult for us to consummate an Initial Business Combination with a target
business.
We
did not register the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws at the time of our IPO, 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
did not register the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws in our IPO. 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 issuance 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,
complete or correct or the SEC issues a stop order. If the shares of Class A common stock issuable upon exercise of the warrants are
not registered under the Securities Act, 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 issuance of the Class A common stock issuable upon exercise of the warrants is not effective within a specified
period following the consummation of our Initial Business Combination, warrant holders may, until such time as there is an effective
registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants
on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available.
If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. We
will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants
in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and
there is no exemption available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt
from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have
no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of Units will have paid the full
Unit purchase price solely for the shares of Class A common stock included in the Units. If and when the warrants become redeemable by
us, we may not exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from
registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We
will use our best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those
states in which the warrants were offered by us in our 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 placement warrants may be able to exercise such placement warrants.
If
you exercise your public warrants on a “cashless basis,” you will receive fewer shares of Class A common stock from such
exercise than if you were to exercise such warrants for cash.
There
are circumstances in which the exercise of the public warrants may be required or permitted to be made on a cashless basis. First, if
a registration statement covering the issuance of 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, warrant holders 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” for this purpose shall mean 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.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We
have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, if, among
other things, the last reported sales price of our common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third
trading day prior to the date we send the notice of redemption to the warrant holders. The redemption price shall be either (i) if the
holder of a warrant has followed the procedures specified in our notice of redemption and surrendered the warrant, the number of shares
of common stock as determined in accordance with the “cashless exercise” provisions of the warrant agreement or (ii) if the
holder of a warrant has not followed such procedures specified in our notice of redemption, the price of $0.01 per warrant. If and when
the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying
securities for sale under all applicable state securities laws. As a result, we may redeem the public warrants as set forth above even
if the holders are otherwise unable to exercise the warrants.
Redemption
of the outstanding warrants could force you to: (1) exercise your warrants and pay the exercise price therefor (or exercise such warrants
on a “cashless” basis) at a time when it may be disadvantageous for you to do so; (2) sell your warrants at the then-current
market price when you might otherwise wish to hold your warrants; or (3) accept the nominal redemption price of $0.01, which, at the
time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants.
The
private warrants will be subject to redemption on the same terms as applicable to the public warrants.
Our
Management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive
fewer shares of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants
for cash.
If
we call our public warrants for redemption after the redemption criteria described elsewhere in this report have been satisfied, our
Management will have the option to require any holder that wishes to exercise his warrant (including any warrants held by our Sponsor,
officers or directors, other purchasers of our founders’ units, or their permitted transferees) to do so on a “cashless basis.”
If our Management chooses to require holders to exercise their warrants on a cashless basis, the number of shares of common stock received
by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash. This will have the effect
of reducing the potential “upside” of the holder’s investment in our company.
Our
warrants and founder shares may have an adverse effect on the market price of our shares of common stock and make it more difficult to
effectuate our Business Combination.
We
have issued warrants to purchase 8,625,000 of our Class A shares of common stock as part of the Units offered in our IPO and, simultaneously
with the closing of our IPO, an aggregate of 377,331 private placement units in a private placement. In each case, each warrant is exercisable
to purchase one share of common stock at a price of $11.50 per share, subject to adjustment as provided herein. In addition, our Sponsor
and other initial stockholders hold an aggregate of 2,156,250 Founder Shares. The Founder Shares are convertible into shares of Class
A common stock on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our Sponsor makes any working capital
loans, up to $1,500,000 of such loans may be converted into additional units, at the price of $10.00 per unit at the option of the lender.
The units would be identical to the placement units. To the extent we issue shares of Class A common stock to effectuate a business transaction,
the potential for the issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants or
conversion rights could make us a less attractive acquisition vehicle to a target business. Any such issuance will increase the number
of issued and outstanding shares and reduce the value of the shares of Class A common stock issued to complete the business transaction.
Therefore, these securities may make it more difficult to effectuate a Business Combination or increase the cost of acquiring the target
business. Additionally, the issuance, or even the possibility of issuance, of the shares underlying the units and warrants could have
an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants
are exercised, you may experience dilution to your holdings.
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 or reduce protections under Nasdaq rules available to them.
Our
securities, including our common stock and warrants, are listed on the Nasdaq Global Market. We cannot guarantee that our securities
will be approved for listing on Nasdaq for any particular period of time. Although after giving effect to our IPO we met, on a pro forma
basis, the minimum listing standards set forth in the Nasdaq listing standards, we cannot assure you that our securities will be, or
will continue to be, listed on Nasdaq in the future or prior to our Business Combination. In order to continue listing our securities
on Nasdaq prior to our Business Combination, we must maintain certain financial, distribution and stock price levels. Additionally, following
closing of our Business Combination, we will be required to demonstrate compliance with Nasdaq’s listing requirements on a post-closing
basis, which are more rigorous than Nasdaq’s continued listing requirements, in order to continue to maintain the listing of our
securities on Nasdaq. We cannot assure you that we will be able to meet those listing requirements at that time.
If
Nasdaq delists our securities from trading on its exchange, we could face significant material adverse consequences, including:
| |
● |
a limited availability
of market quotations for our securities; |
| |
|
|
| |
● |
reduced liquidity with
respect to our securities; |
| |
|
|
| |
● |
a determination that our
shares of common stock are “penny stock” which will require brokers trading in our shares of common stock to adhere to
more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares of
common stock; |
| |
|
|
| |
● |
a limited amount of media
and analyst coverage of our company; and |
| |
|
|
| |
● |
a decreased ability to
issue additional securities or obtain additional financing in the future. |
The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or pre-empts 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 shares of common stock and warrants will be listed on the Nasdaq Global Market, our Units, shares of common stock, and warrants will
be covered securities. Although the states are preempted from regulating the sale of covered securities, the federal statute does allow
the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states
can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to
prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities
regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of
securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not be covered
securities and we would be subject to regulation in each state in which we offer our securities.
General
Risks
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our Business Combination, require substantial
financial and Management resources, and increase the time and costs of completing an acquisition.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report
on Form 10-K for the year ending December 31, 2022. Only in the event we are deemed to be a large accelerated filer or an accelerated
filer will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control
over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. If we fail to maintain the
adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation.
Any inability to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley Act also requires that
our independent registered public accounting firm report on Management’s evaluation of our system of internal controls. 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 acquisition. Furthermore, any failure to implement required new or improved controls, or difficulties encountered
in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results
or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our
reported financial information, which could have a negative effect on the trading price of our shares of common stock.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of
certain exemptions from disclosure requirements available to emerging growth and smaller reporting companies, this could make our securities
less attractive to investors and may make it more difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including
if the market value of our shares of common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in
which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will
find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as
a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may
be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such
extended transition period which means that when a standard is issued or revised and it has different application dates for public or
private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of
the potential differences in accountant standards used.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held
by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues exceeded
$100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as
of the end of that year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may
also make comparison of our financial statements with other public companies difficult or impossible.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments 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 and results
of operations.
Cyber
incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We
depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of
third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure,
or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or
to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of
them, could have adverse consequences on our ability to consummate a Business Combination and lead to financial loss.
We
may be subject to cybersecurity risks following consummation of a Business Combination.
Any
entity we may seek to acquire may rely on information technology systems, including third-party hosted servers and cloud-based servers,
to keep business, financial, and corporate records, communicate internally and externally, and operate other critical functions. If any
of those internal systems or the systems of its third-party providers are compromised due to cyber incidents, then sensitive documents
could be exposed or deleted, and the Company’s ability to conduct business could be impaired. Cyber incidents can result from deliberate
attacks or unintentional events. These incidents can include, but are not limited to, unauthorized access to systems, computer viruses
or other malicious code, denial of service attacks, malware, ransomware, phishing, SQL injection attacks, human error, or other events
that result in security breaches or give rise to the manipulation or loss of sensitive information or assets. Cyber incidents can be
caused by various persons or groups, including disgruntled employees and vendors, activists, organized crime groups, and state-Sponsored
and individual hackers. Cyber incidents can also be caused or aggravated by natural events, such as earthquakes, floods, fires, power
loss, and telecommunications failures. In addition to operational and business consequences, if a target business’ cybersecurity
is breached, it could be held liable to its customers or other parties in regulatory or other actions, and it may be exposed to reputation
damages and loss of trust and business. This could result in costly investigations and litigation, civil or criminal penalties, fines,
and negative publicity. Any of the foregoing could have a material adverse effect on the operations and profitability of a target business
we seek to acquire.
There
may be tax consequences to our Business Combinations that may adversely affect us.
While
we expect to undertake any merger or acquisition with a target business so as to minimize taxes both to the acquired target business
and us, such Business Combination might not meet the statutory requirements of a tax-free reorganization, or the parties might not obtain
the intended tax-free treatment upon a transfer of shares or assets. A non-qualifying reorganization could result in the imposition of
substantial taxes.
Tax
reform legislation enacted in the U.S. in 2017 could adversely affect our business and financial condition following a Business Combination.
On
December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law, making significant changes to the
Internal Revenue Code of 1986, as amended. Changes under the Tax Act include, but are not limited to, a corporate tax rate decrease from
35% to 21% effective for tax years beginning after December 31, 2017, a mandatory deemed repatriation of previously untaxed cumulative
foreign earnings (generally applicable to 10% U.S. stockholders of a “controlled foreign corporation” or “CFC”
and taxed at reduced rates), a limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small
businesses), a limitation of the deduction for net operating losses to 80% of current year taxable income and the elimination of net
operating loss carrybacks the transition to a “participation exemption system” for the taxation of earnings of foreign corporations,
where a U.S. C corporation can generally deduct 100% of dividends received from the foreign source of income of a 10% owned foreign corporation,
immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing
many business deductions and credits. The overall impact of the Tax Act is uncertain, and it could make completing a Business Combination
with us less appealing than with companies in other countries. In addition, it is uncertain if and to what extent various states will
conform to the Tax Act and what effect any legal challenges will have on the Tax Act, including litigation in the U.S. and international
challenges brought by organizations such as the World Trade Organization. The impact of the Tax Act on holders of our securities is also
uncertain and could be adverse. Investors should consult with their legal and tax advisors with respect to the Tax Act and the potential
tax consequences of investing in or holding our securities.
We
may face risks related to companies in the technology sector.
Business
Combinations with companies in the technology sector (where we plan to search for our initial business combination target) entail special
considerations and risks. If we are successful in completing a Business Combination with such a target business, we may be subject to,
and possibly adversely affected by, the following risks:
| |
● |
an
inability to compete effectively in a highly competitive environment with many incumbents having substantially greater resources; |
| |
|
|
| |
● |
an
inability to manage rapid change, increasing consumer expectations and growth; |
| |
|
|
| |
● |
an
inability to build strong brand identity and improve subscriber or customer satisfaction and loyalty; |
| |
|
|
| |
● |
a
reliance on proprietary technology to provide services and to manage our operations, and the failure of this technology to operate
effectively, or our failure to use such technology effectively; |
| |
|
|
| |
● |
an
inability to deal with our subscribers’ or customers’ privacy concerns; |
| |
|
|
| |
● |
an
inability to attract and retain subscribers or customers; |
| |
|
|
| |
● |
an
inability to license or enforce intellectual property rights on which our business may depend; |
| |
|
|
| |
● |
any
significant disruption in our computer systems or those of third parties that we would utilize in our operations; |
| |
|
|
| |
● |
an
inability by us, or a refusal by third parties, to license content to us upon acceptable terms; |
| |
|
|
| |
● |
potential
liability for negligence, copyright or trademark infringement or other claims based on the nature and content of materials that we
may distribute; |
| |
● |
competition
for advertising revenue; |
| |
|
|
| |
● |
competition
for the leisure and entertainment time and discretionary spending of subscribers or customers, which may intensify in part due to
advances in technology and changes in consumer expectations and behavior; |
| |
|
|
| |
● |
disruption
or failure of our networks, systems or technology as a result of computer viruses, “cyber-attacks,” misappropriation
of data or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental releases of information or similar
events; |
| |
|
|
| |
● |
an
inability to obtain necessary hardware, software and operational support; and |
| |
|
|
| |
● |
reliance
on third-party vendors or service providers. |
Any
of the foregoing could have an adverse impact on our business, financial condition and results of operations following a Business Combination.
We
cannot predict how tax reform legislation will affect us, our Initial Business Combination, or our investors.
Legislative
or other actions relating to taxes could have a negative effect on us, our investors, or our Initial Business Combination. The rules
dealing with U.S. federal income taxation are constantly under review by legislators and by the Internal Revenue Service and the U.S.
Treasury Department. We cannot predict with certainty how any changes in the tax laws might affect us, our investors, or our Initial
Business Combination. New legislation and any U.S. Treasury regulations, administrative interpretations or court decisions interpreting
such legislation could significantly and negatively affect the U.S. federal income tax consequences to us and our investors or could
have other adverse consequences, including changes in tax rates that could impact our effective tax rate. Investors are urged to consult
with their tax advisors regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect
on an investment in our securities.
There
are no authorities addressing the proper allocation of tax basis to the components of a unit, and therefore, investors may not appropriately
allocate such basis for U.S. federal income tax purposes.
No
statutory, administrative or judicial authority directly addresses the treatment of a unit or instruments similar to a unit for U.S.
federal income tax purposes and, therefore, that treatment is not entirely clear. We intend to treat the acquisition of a unit, for U.S.
federal income tax purposes, as the acquisition of one share of our common stock, and one warrant upon the consummation of an Initial
Business Combination, and, by purchasing a unit, you agree to adopt such treatment for U.S. federal income tax purposes. For U.S. federal
income tax purposes, each holder of a unit must allocate the purchase price paid by such holder for such unit between the one share of
our common stock and one warrant upon the consummation of an Initial Business Combination based on the relative fair market value of
each at the time of issuance. The price allocated should be the stockholder’s tax basis in such share. Any disposition of a unit
should be treated for U.S. federal income tax purposes as a disposition of the share of our share of our common stock and one warrant
upon the consummation of an Initial Business Combination comprising the unit, and the amount realized on the disposition should be allocated
to the common stock based on its fair market value at the time of disposition. The foregoing treatment of the unit and a holder’s
purchase price allocation are not binding on the Internal Revenue Service, or “IRS”, or the courts. The IRS or the courts
may not agree with such characterization and investors could suffer adverse U.S. federal income tax consequences as a result. Accordingly,
we urge each prospective investor to consult its own tax advisors regarding the tax consequences of an investment in a unit (including
alternative characterizations of a unit).
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors
might be willing to pay in the future for our Class A common stock and could entrench management.
Our
amended and restated certificate of incorporation will contain provisions that may discourage unsolicited takeover proposals that stockholders
may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors
to designate the terms of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage
transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions
may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over
prevailing market prices for our securities.
Our
amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’
ability to obtain a favorable judicial forum for disputes with our company or our company’s directors, officers or other employees.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in
our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain other actions
may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the
suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which the
Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court
of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following
such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or (C) for
which the Court of Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring any interest
in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate
of incorporation. This choice of forum provision may limit or make more costly a stockholder’s ability to bring a claim in a judicial
forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage
lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our amended and
restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with
resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our
amended and restated certificate of incorporation will provide that the exclusive forum provision will be applicable to the fullest extent
permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over
all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result,
the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other
claim for which the federal courts have exclusive jurisdiction. In addition, our amended and restated certificate of incorporation will
provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States
of America shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause
of action arising under the Securities Act, or the rules and regulations promulgated thereunder. We note, however, that there is uncertainty
as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the
rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over
all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
Risks
Associated with Acquiring and Operating a Business Outside of the United States
We
may pursue a target company with operations or opportunities outside of the United States for our Initial Business Combination. Accordingly,
we may face additional burdens in connection with investigating, agreeing to and completing such Initial Business Combination, and if
we effect such Initial Business Combination, we would be subject to a variety of additional risks that may negatively impact our operations.
We
may pursue a target a company with operations or opportunities outside of the United States for our Initial Business Combination, and
therefore may be subject to risks associated with cross-border Business Combinations, including in connection with investigating, agreeing
to and completing our Initial Business Combination, conducting due diligence in a foreign jurisdiction, having such transaction approved
by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If
we effect our Initial Business Combination with such a company, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
| |
● |
costs and difficulties
inherent in managing cross-border business operations; |
| |
|
|
| |
● |
rules and regulations regarding
currency redemption; |
| |
|
|
| |
● |
complex corporate withholding
taxes on individuals; |
| |
|
|
| |
● |
laws governing the manner
in which future Business Combinations may be effected; |
| |
|
|
| |
● |
exchange listing and/or
delisting requirements; |
| |
|
|
| |
● |
tariffs and trade barriers; |
| |
|
|
| |
● |
regulations related to
customs and import/export matters; |
| |
|
|
| |
● |
local or regional economic
policies and market conditions; |
| |
● |
unexpected changes in regulatory
requirements; |
| |
|
|
| |
● |
longer payment cycles; |
| |
|
|
| |
● |
tax issues, such as tax
law changes and variations in tax laws as compared to the United States; |
| |
|
|
| |
● |
currency fluctuations and
exchange controls; |
| |
|
|
| |
● |
rates of inflation; |
| |
|
|
| |
● |
challenges in collecting
accounts receivable; |
| |
|
|
| |
● |
cultural and language differences; |
| |
|
|
| |
● |
employment regulations; |
| |
|
|
| |
● |
underdeveloped or unpredictable
legal or regulatory systems; |
| |
|
|
| |
● |
corruption; |
| |
|
|
| |
● |
protection of intellectual
property; |
| |
|
|
| |
● |
social unrest, crime, strikes,
riots and civil disturbances; |
| |
|
|
| |
● |
regime changes and political
upheaval; |
| |
|
|
| |
● |
terrorist attacks and wars;
and |
| |
|
|
| |
● |
deterioration of political
relations with the United States. |
We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such Initial Business
Combination, or, if we complete such combination, our operations might suffer, either of which may adversely impact our business, financial
condition and results of operations.
After
our Initial Business Combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue
will be derived from our operations in such country. Accordingly, our results of operations and prospects will be subject, to a significant
extent, to the economic, political and legal policies, developments and conditions in the country in which we operate.
The
economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect
our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be
sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected,
there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially
and adversely affect our ability to find an attractive target business with which to consummate our Initial Business Combination and
if we effect our Initial Business Combination, the ability of that target business to become profitable.
After
our Business Combination, it is possible that a majority of our directors and officers will live outside the United States and all of
our assets will be located outside the United States; therefore investors may not be able to enforce federal securities laws or their
other legal rights.
It
is possible that after our Business Combination, a majority of our directors and officers will reside outside of the United States and
all of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible, for
investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers or to
enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers under
United States laws. In particular, investors should be aware that there is uncertainty as to whether the courts of other applicable jurisdictions
would recognize and enforce judgments of U.S. courts obtained against us or our directors or officers predicated upon the civil liability
provisions of the securities laws of the United States or any state in the United States or entertain original actions brought in another
jurisdiction’s courts against us or our directors or officers predicated upon the securities laws of the United States or any state
in the United States.
If
our Management following our Business Combination is unfamiliar with United States securities laws, they may have to expend time and
resources becoming familiar with such laws, which could lead to various regulatory issues.
Following
our Business Combination, any or all of our Management could resign from their positions as officers of the Company, and the Management
of the target business at the time of the Business Combination will remain in place. Management of the target business may not be familiar
with United States securities laws. If new Management is unfamiliar with United States securities laws, they may have to expend time
and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues
which may adversely affect our operations.
If
we effect a Business Combination with a company located outside of the United States, the laws applicable to such company will likely
govern all of our material agreements and we may not be able to enforce our legal rights.
If
we effect a Business Combination with a company located outside of the United States, the laws of the country in which such company operates
will govern almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able
to enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement
of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability
to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities
or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets
would be located outside of the United States and some of our officers and directors might reside outside of the United States. As a
result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our
directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our
directors and officers under Federal securities laws.
Because
of the costs and difficulties inherent in managing cross-border business operations after we acquire it, our results of operations may
be negatively impacted following a Business Combination.
Managing
a business, operations, personnel or assets in another country is challenging and costly. Management of the target business that we may
hire (whether based abroad or in the U.S.) may be inexperienced in cross-border business practices and unaware of significant differences
in accounting rules, legal regimes and labor practices. Even with a seasoned and experienced Management team, the costs and difficulties
inherent in managing cross-border business operations, personnel and assets can be significant (and much higher than in a purely domestic
business) and may negatively impact our financial and operational performance.
Many
countries, and especially those in emerging markets, have difficult and unpredictable legal systems and underdeveloped laws and regulations
that are unclear and subject to corruption and inexperience, which may adversely impact our results of operations and financial condition.
Our
ability to seek and enforce legal protections, including with respect to intellectual property and other property rights, or to defend
ourselves with regard to legal actions taken against us in a given country, may be difficult or impossible, which could adversely impact
our operations, assets or financial condition. Rules and regulations in many countries, including some of the emerging markets within
the regions we will Initially focus, are often ambiguous or open to differing interpretation by responsible individuals and agencies
at the municipal, state, regional and federal levels. The attitudes and actions of such individuals and agencies are often difficult
to predict and inconsistent. Delay with respect to the enforcement of particular rules and regulations, including those relating to customs,
tax, environmental and labor, could cause serious disruption to operations abroad and negatively impact our results.
After
our Business Combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue may
be derived from our operations in such country. Accordingly, our results of operations and prospects will be subject, to a significant
extent, to the economic, political and legal policies, developments and conditions in the country in which we operate.
The
economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect
our business. The economies in developing markets we will initially focus on differ from the economies of most developed countries in
many respects. Such economic growth has been uneven, both geographically and among various sectors of the economy and such growth may
not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected,
there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially
and adversely affect our ability to find an attractive target business with which to consummate our Business Combination and if we effect
our Business Combination, the ability of that target business to become profitable.
Exchange
rate fluctuations and currency policies may cause a target business’ ability to succeed in the international markets to be diminished.
In
the event we acquire a non-U.S. target, all revenues and income would likely be received in a foreign currency, the dollar equivalent
of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency. The value
of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and economic conditions.
Any change in the relative value of such currency against our reporting currency may affect the attractiveness of any target business
or, following consummation of our Business Combination, our financial condition and results of operations. Additionally, if a currency
appreciates in value against the dollar prior to the consummation of our Business Combination, the cost of a target business as measured
in dollars will increase, which may make it less likely that we are able to consummate such transaction.
Because
our business objective includes the possibility of acquiring one or more operating businesses with primary operations in emerging markets
we will focus on, changes in the exchange rate between the U.S. dollar and the currency of any relevant jurisdiction may affect our ability
to achieve such objective. For instance, the exchange rates between the Turkish lira or the Indian rupee and the U.S. dollar has changed
substantially in the last two decades and may fluctuate substantially in the future. If the U.S. dollar declines in value against the
relevant currency, any Business Combination will be more expensive and therefore more difficult to complete. Furthermore, we may incur
costs in connection with conversions between U.S. dollars and the relevant currency, which may make it more difficult to consummate a
Business Combination.
Because
foreign law could govern almost all of our material agreements, we may not be able to enforce our rights within such jurisdiction or
elsewhere, which could result in a significant loss of business, business opportunities or capital.
Foreign
law could govern almost all of our material agreements. The target business may not be able to enforce any of its material agreements
or that remedies will be available outside of such foreign jurisdiction’s legal system. The system of laws and the enforcement
of existing laws and contracts in such jurisdiction may not be as certain in implementation and interpretation as in the United States.
Judiciaries in such jurisdiction may also be relatively inexperienced in enforcing corporate and commercial law, leading to a higher
than usual degree of uncertainty as to the outcome of any litigation. As a result, the inability to enforce or obtain a remedy under
any of our future agreements could result in a significant loss of business and business opportunities.
We
may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices
Act could have a material adverse effect on our business.
We
are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign
governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining
or retaining business. We will have operations, agreements with third parties and may make sales overseas, which may experience corruption.
Activities overseas may create the risk of unauthorized payments or offers of payments by one of the employees, consultants, or sales
agents of our Company, because these parties are not always subject to our control. It will be our policy to implement safeguards to
discourage these practices by our employees. Also, our existing safeguards and any future improvements may prove to be less than effective,
and the employees, consultants, or sales agents of our Company may engage in conduct for which we might be held responsible. Violations
of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect
our business, operating results and financial condition. In addition, the government may seek to hold our Company liable for successor
liability FCPA violations committed by companies in which we invest or that we acquire.
Corporate
governance standards in foreign countries may not be as strict or developed as in the United States and such weakness may hide issues
and operational practices that are detrimental to a target business.
General
corporate governance standards in some countries are weak in that they do not prevent business practices that cause unfavorable related
party transactions, over-leveraging, improper accounting, family company interconnectivity and poor Management. Local laws often do not
go far to prevent improper business practices. Therefore, stockholders may not be treated impartially and equally as a result of poor
Management practices, asset shifting, conglomerate structures that result in preferential treatment to some parts of the overall company,
and cronyism. The lack of transparency and ambiguity in the regulatory process also may result in inadequate credit evaluation and weakness
that may precipitate or encourage financial crisis. In our evaluation of a Business Combination we will have to evaluate the corporate
governance of a target and the business environment, and in accordance with United States laws for reporting companies take steps to
implement practices that will cause compliance with all applicable rules and accounting practices. Notwithstanding these intended efforts,
there may be endemic practices and local laws that could add risk to an investment we ultimately make and that result in an adverse effect
on our operations and financial results.
Companies
in foreign countries may be subject to accounting, auditing, regulatory and financial standards and requirements that differ, in some
cases significantly, from those applicable to public companies in the United States, which may make it more difficult or complex to consummate
a Business Combination. In particular, the assets and profits appearing on the financial statements of a foreign company may not reflect
its financial position or results of operations in the way they would be reflected had such financial statements been prepared in accordance
with U.S. GAAP and there may be substantially less publicly available information about companies in certain jurisdictions than there
is about comparable United States companies. Moreover, foreign companies may not be subject to the same degree of regulation as are United
States companies with respect to such matters as insider trading rules, tender offer regulation, stockholder proxy requirements and the
timely disclosure of information.
Legal
principles relating to corporate affairs and the validity of corporate procedures, directors’ fiduciary duties and liabilities
and stockholders’ rights for foreign corporations may differ from those that may apply in the U.S., which may make the consummation
of a Business Combination with a foreign company more difficult. We therefore may have more difficulty in achieving our business objective.
Because
a foreign judiciary may determine the scope and enforcement of almost all of our target business’ material agreements under the
law of such foreign jurisdiction, we may be unable to enforce our rights inside and outside of such jurisdiction.
The
law of a foreign jurisdiction, may govern almost all of our target business’ material agreements, some of which may be with governmental
agencies in such jurisdiction. We cannot assure you that the target business or businesses will be able to enforce any of their material
agreements or that remedies will be available outside of such jurisdiction. The inability to enforce or obtain a remedy under any of
our future agreements may have a material adverse impact on our future operations.
A
slowdown in economic growth in the markets that our business target operates in may adversely affect our business, financial condition,
results of operations, the value of its equity shares and the trading price of our shares following our Business Combination.
Following
the Business Combination, our results of operations and financial condition may be dependent on, and may be adversely affected by, conditions
in financial markets in the global economy, and, particularly in the markets where the business operates. The specific economy could
be adversely affected by various factors such as political or regulatory action, including adverse changes in liberalization policies,
business corruption, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, inflation,
commodity and energy prices and various other factors which may adversely affect our business, financial condition, results of operations,
value of our equity shares and the trading price of our shares following the Business Combination.
Regional
hostilities, terrorist attacks, communal disturbances, civil unrest and other acts of violence or war may result in a loss of investor
confidence and a decline in the value of our equity shares and trading price of our shares following our Business Combination.
Terrorist
attacks, civil unrest and other acts of violence or war may negatively affect the markets in which we may operates our business following
our Business Combination and also adversely affect the worldwide financial markets. In addition, the countries we will focus on, have
from time to time experienced instances of civil unrest and hostilities among or between neighboring countries. Any such hostilities
and tensions may result in investor concern about stability in the region, which may adversely affect the value of our equity shares
and the trading price of our shares following our Business Combination. Events of this nature in the future, as well as social and civil
unrest, could influence the economy in which our business target operates, and could have an adverse effect on our business, including
the value of equity shares and the trading price of our shares following our Business Combination.
The
occurrence of natural disasters may adversely affect our business, financial condition and results of operations following our Business
Combination.
The
occurrence of natural disasters, including hurricanes, floods, earthquakes, tornadoes, fires and pandemic disease may adversely affect
our business, financial condition or results of operations following our Business Combination. The potential impact of a natural disaster
on our results of operations and financial position is speculative, and would depend on numerous factors. The extent and severity of
these natural disasters determines their effect on a given economy. Although the long term effect of diseases such as the H5N1 “avian
flu,” or H1N1, the swine flu, cannot currently be predicted, previous occurrences of avian flu and swine flu had an adverse effect
on the economies of those countries in which they were most prevalent. An outbreak of a communicable disease in our market could adversely
affect our business, financial condition and results of operations following our Business Combination. We cannot assure you that natural
disasters will not occur in the future or that its business, financial condition and results of operations will not be adversely affected.
Any
downgrade of credit ratings of the country in which the company we acquire does business may adversely affect our ability to raise debt
financing following our Business Combination.
No
assurance can be given that any rating organization will not downgrade the credit ratings of the sovereign foreign currency long-term
debt of the country in which our business target operates, which reflect an assessment of the overall financial capacity of the government
of such country to pay its obligations and its ability to meet its financial commitments as they become due. Any downgrade could cause
interest rates and borrowing costs to rise, which may negatively impact both the perception of credit risk associated with our future
variable rate debt and our ability to access the debt markets on favorable terms in the future. This could have an adverse effect on
our financial condition following our Business Combination.
Returns
on investment in foreign companies may be decreased by withholding and other taxes.
Our
investments will incur tax risk unique to investment in developing economies. Income that might otherwise not be subject to withholding
of local income tax under normal international conventions may be subject to withholding of income tax in a developing economy. Additionally,
proof of payment of withholding taxes may be required as part of the remittance procedure. Any withholding taxes paid by us on income
from our investments in such country may or may not be creditable on our income tax returns. We intend to seek to minimize any withholding
tax or local tax otherwise imposed. However, there is no assurance that the foreign tax authorities will recognize application of such
treaties to achieve a minimization of such tax. We may also elect to create foreign subsidiaries to effect the Business Combinations
to attempt to limit the potential tax consequences of a Business Combination.