ITEM 1.
BUSINESS
Summary
Hemant
Taneja, Glen Tullman, Stephen Klasko MD, MBA, Jennifer Schneider, MD, Quentin Clark, Anita V. Pramoda and Evan Sotiriou, established
Health Assurance Acquisition Corp., a recently formed blank check company. Our mission is to partner with leading healthcare businesses
leveraging technology. We aim to help them become iconic category winners that accelerate the digital transformation of healthcare
into a new system of health assurance.
Healthcare
is a foundational pillar of society and one of the largest sectors of the United States economy. Healthcare spending is projected
to reach $4.0 trillion in 2020, accounting for 18% of US GDP. As healthcare costs have continued to rise, consumers have shouldered
an increasing portion of the expense out of pocket. In 2018, the average family paid more to hospitals than to the federal government
in taxes, representing 15% of median household income. Even as consumers have paid more, the quality of care in the United States
has fallen to the lowest in the developed world, and hospitals regularly report declining revenues and rising administration costs.
This complex and inflexible system is underpinned by misaligned incentives across the stakeholder ecosystem that result in poor
patient outcomes and high cost of care.
We
believe the intersection of technology and healthcare is one of the most significant value creation opportunities of this decade
and the most important area where entrepreneurs can make a difference to society. Over the past fifteen years, content, community,
and commerce have been digitized and reorganized online, giving rise to massive technology platforms, like Google, Amazon, and
Netflix. Yet healthcare has remained largely untouched by these developments.
We
believe this is the pivotal moment to invest in healthcare innovation. The recent COVID-19 pandemic starkly exposed the lack of
resilience in our current healthcare system and accelerated changes that might otherwise have taken years to evolve. The
future is rushing to us—healthcare is at the beginning of its internet moment. Our experience has shown that technology
can fill the apparent gaps in healthcare and create a sustainable system, enabling us to better care for individuals and empower
them to take control of their own health.
We
have a vision for this new tech-enabled system: we call it health assurance. It is a new category of consumer-centric,
data-driven, cloud-based healthcare designed to help people stay healthy and avoid today’s “sick care” paradigm.
Health assurance companies deliver modern consumer health experiences while decreasing the overall healthcare GDP and are rooted
in partnership with existing care providers. In a world built on health assurance, care is continuous, proactive, personalized,
and available everywhere. Health assurance companies will be rewarded based on patient outcomes, enabling free-market economics
to perform their important role in creating best-in-class solutions.
The
goal for HAAC is to partner with companies that help build this new system of health assurance. We know that health assurance
companies can generate both positive clinical outcomes and outsized shareholder returns because our team built the first one—Livongo.
In 2014, Mr. Taneja and Mr. Tullman set out to create a better experience for patients with diabetes. They knew that
each person has a unique relationship with diabetes and should have tools to manage their condition according to their experience.
Livongo did not make the old model of diabetes treatment more efficient. Instead, it created a new type of care model, empowering
members with technology so that they could think less about their condition, see doctors less often, and seldom have emergencies.
The result was a high reported Net Promoter Score of 64 among patients using Livongo, and reduced costs for both payers and
providers. Net Promoter Score is a percentage, expressed as a numerical value up to a maximum value of 100, to gauge customer
satisfaction and reflects responses to the following question on a scale of zero to 10: “How likely are you to recommend
Livongo to a friend?” Responses of nine or 10 were considered “promoters,” responses of seven or eight were
considered neutral or “passives,” and responses of six or less were considered “detractors.” The number
of detractors were subtracted from the number of respondents who are promoters and that number was divided by the total number
of respondents. Livongo has since expanded the platform to holistically serve their members and offer the technology they developed
to those with multiple chronic conditions.
Livongo
and chronic disease management are just the beginning of our vision. We want to create the conditions for 1,000 Livongos to bloom.
General Catalyst, our sponsor, has already constructed a federation of synergistic companies within its portfolio. We believe
there will be dozens of multi-billion dollar winners created by this sectoral shift, and HAAC has a set of core beliefs and values
that will help to identify the best health assurance businesses.
Our
Beliefs
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Change
will happen primarily through existing entry points.
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Innovators
will build around the individual, focusing on empowering them and improving their health
outcomes.
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The
economic model of healthcare will shift.
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The
digital health sector will become bigger than the physical health sector in terms of
time and dollars spent.
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Person-centric
data and improved workflows are at the core of this transformation.
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Our
Values
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Contribute
to reducing healthcare as a percentage of GDP.
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Design
for bringing individuals along the journey.
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Partner
with existing healthcare systems and physical care providers.
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Focus
on retraining and deploying the healthcare workforce.
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Our
Areas of Focus
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Persona-driven
consumer experiences that leverage AI feedback loops.
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Virtual
healthcare services that increase access and affordability.
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New
economic models for managing risk and paying for care.
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Cloud
infrastructure that helps generate data and enables the development of many health assurance
companies.
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Modern
workflows for health systems and providers.
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Full-stack,
tech-enabled providers.
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Using
this framework, HAAC aims to identify companies and use our unique experience to help scale and transform them into category leaders
in the public markets. We will look for companies that align with our vision of health assurance, have high growth potential and
expanding TAMs, and are led by mission-driven CEOs committed to responsible innovation.
We
have assembled one of the most credible teams at the intersection of healthcare and technology to pursue this immense opportunity.
We believe our insight and experience will attract some of the world’s leading entrepreneurs to work with us on our shared
vision. Each team member has deep industry and operational expertise, a proven ability to identify and interpret healthcare and
technology trends, history scaling businesses from inception and at inflection, and an understanding of the requirements for successful
execution. Our management team has a track record of success, born from close collaboration through founding companies together,
investing in technology, advising as board members and industry executives, and sharing a joint goal. These individuals are prominent
lights in the healthcare and technology ecosystems in their own right, and we believe their deep networks will allow us to surface
and win the best opportunities.
Health
Assurance Acquisition Corp. is a recently incorporated blank check company incorporated as a Delaware corporation and formed for
the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination
with one or more businesses. We have not selected any specific business combination target.
Our
Operating, Investing, Advising, and Industry Experience
Our
management team has extensive collective experience as investors in, advisors to, and executives and board members of healthcare
and technology companies at various stages of their growth cycles, in both private and public markets. They have been long-term
partners to healthcare technology businesses, successfully helping them build and execute on their strategies, invest for long-term
growth, and drive value for stakeholders.
Our
team’s combined experience spans vital parts of the healthcare ecosystem, including provider operations, virtual services,
electronic health records and technology infrastructure. This background, coupled with their deep networks and long-standing relationships,
will provide valuable access to the highest quality technology companies and will produce unique insights and opportunities for
growth and value creation. They will contribute this expertise and experience, as well as the capital raised in our initial offering,
to partner with the leading companies at the intersection of healthcare and technology to realize their collective goal.
Mr. Taneja
has over twenty years of experience in identifying and partnering with extraordinary companies. Mr. Taneja investing
thesis is rooted in a belief that technology is causing a paradigm shift in all industries, making it possible to efficiently
and profitably offer highly personalized products and services to everyone in society. Mr. Taneja has brought this thesis
to healthcare by co-founding four health-assurance technology companies, Livongo, Commure and two unannounced ventures. In addition,
Mr. Taneja has backed category defining healthcare companies like Color, Gusto, Mindstrong and Ro. Mr. Taneja is also
an investor in numerous other market-leading companies like Anduril, Gitlab, Grammarly, Samsara, Snap and Stripe.
Mr. Clark
brings decades of executive-level technical leadership. Before joining General Catalyst, Mr. Clark was the CTO of Dropbox,
helping develop its growth strategy and successfully taking them public. Mr. Clark was also CTO and CBO of SAP, driving product
strategy across the cloud platform. Mr. Clark spent twenty years of his career in various senior leadership roles at
Microsoft, notably overseeing the design and delivery of data products such as Azure and Microsoft SQL Server. Mr. Clark
now focuses on investing in enterprise SaaS and healthcare and oversees the ecosystem activity General Catalyst engages in to
further its health assurance federation. Mr. Clark sits on the boards of Commure, Kernel, ThoughtSpot, Coda, and Minio.
Dr. Klasko
is the CEO of Jefferson Health and President of Jefferson University. Dr. Klasko’s mission is “healthcare with
no address.” Dr. Klasko is someone at the heart of a huge healthcare institution who understands the balance of scaling
up to meet demand while emphasizing unscaling on a care delivery level to maintain personalized experience for consumers. When
Livongo launched, Dr. Klasko agreed to have Jefferson try this new solution. Jefferson was able to provide invaluable clinical
feedback to Livongo’s product team. Dr. Klasko and the team are deeply committed to the belief that to change care
truly, healthcare technology companies need to partner and integrate with existing health systems.
Mr. Tullman
and Dr. Schneider are the executive chairman and president, respectively, of Livongo a digital health pioneer committed to
empowering people with chronic health conditions. Mr. Tullman is not only a visionary founder, but he also has extensive
experience taking companies public, first at Enterprise Systems, where he was CEO, and then at Allscripts. Mr. Tullman is
driven by the thesis that it is possible to successfully bring consumer innovations from all sectors into healthcare as he did
with Livongo. Dr. Schneider has been responsible for product, data science, engineering, marketing, and clinical operations
at Livongo, building those operations to a point they are now considered industry-leading. Having previously also served as the
Castlight’s Chief Medical Officer, Dr. Schneider brings a critical lens to assessing products given her unique technology
and clinical background. Both Mr. Tullman and Dr. Schneider have invaluable industry and operational experience, standing
at the helm of an unprecedented health assurance success story, and bring a passion for reimagining and redesigning care experiences.
Ms. Pramoda
is the CEO of Owned Outcomes, Inc., a health analytics software company helping customers engage with physicians, support patients,
and win at bundled payments. Ms. Pramoda brings a unique health data perspective, having served as both CFO of Epic Systems
Corporation and a board member of Allscripts. Through these experiences, Ms. Pramoda developed a deep commitment to democratizing
consumer access to their own health information. Ms. Pramoda has impressive financial acumen, having also served as chairperson
/ board director of the Federal Reserve Bank of San Francisco, allowing her to assess the value of health assurance businesses
deeply. Ms. Pramoda is currently a board member to several companies, including Health Catalyst, Inc. and GoHealth, two companies
at the intersection of technology and healthcare.
Uniquely,
our team has worked together for several years despite coming from different organizations, allowing the team to work in
total alignment to identify exceptional opportunities. Mr. Taneja and Mr. Tullman both served on the board of Humedica,
founded Livongo together, and have co-invested in various companies. Mr. Taneja and Mr. Clark came together in 2016,
four years before Mr. Clark joined General Catalyst, to begin ideating on the foundations of Commure. They both have
worked with Ms. Pramoda since those early days, using her as a key strategic thought partner as they built Commure. Dr. Klasko,
as previously mentioned, has worked with all members of the team as a pioneering leader in health system innovation. Mr. Taneja
and Dr. Klasko recently authored a book together, UnHealthcare, in which they lay out their thesis of the healthcare
system’s transformation into one of health assurance. Their thesis underpins the mission of HAAC.
Our
management team has extensive collective experience as investors in, advisors to, and executives and board members of healthcare
and technology companies at various stages of their growth cycles, both private and public. All members, as technology and healthcare
industry veterans, have been long-term partners to healthcare technology businesses, successfully helping them build out and execute
their visions, invest for long-term growth, and drive value for all stakeholders.
Not
all the companies in which our team has invested have achieved the same level of value creation. Past performance by any member
or members of our management team, any of their respective affiliates, or HAAC is not a guarantee either (1) that we will
be able to identify a suitable candidate for our initial business combination or (2) of success with respect to any business
combination we may consummate. You should not rely on the historical record of any member or members of our management team, any
of their respective affiliates, HAAC, or any related investment’s performance as indicative of the future performance of
an investment in the company or the returns the company will, or is likely to, generate going forward. See “cautionary note
regarding forward looking statements.”
Market
Opportunity
We
believe the intersection of technology and healthcare is one of the most significant value creation opportunities of this decade.
The
US annual spend on healthcare is $4 trillion. There is a huge opportunity to reduce this spend while still capturing immense value.
If tech entrepreneurs and the traditional healthcare ecosystem work together to understand and reimagine care truly, we believe
the health assurance space will generate more than ten to fifteen $100 billion companies.
A
substantial market opportunity exists at this intersection of health and technology for a potential business combination. Globally,
there are 46 healthcare unicorns, valued in aggregate at $117 billion, with over $45 billion of cumulative value in
digital health unicorns alone. The public markets have seen the successful IPOs of several multi-billion dollar digital health
companies over the last few years, including Teladoc, Livongo, Amwell, and GoodRx, which currently have a combined market
value of >$55 billion. This growth in the digital health sector is only set to increase with the tailwinds presented by
catalyzing events, including the COVID-19 pandemic, evidenced by a record-setting $5.4 billion of digital health venture funding
in the first half of 2020.
As
the last several months have demonstrated, periods of market volatility and dislocation can present even the highest quality
healthcare or technology companies with challenges accessing the public markets through a traditional IPO. While there has been
an increasing number of technology-focused blank check companies issued in recent months, we believe no other has the same
degree of coherent vision, alignment with stakeholders, combination of sector expertise, entrepreneurial mindset, track record,
and desire for transformational change. We believe we can provide a high-quality company with a lower risk path to the public
capital markets while also providing our investors option value on an investment in these types of companies during periods of
market volatility. The recent cohort of blank check company IPOs and validation by the involvement of bulge bracket investment
banks and advisors have shown support for the effectiveness of this vehicle and substantiates our strategy. Health Assurance Acquisition
Corp. will be the only blank check company searching for its initial business combination led by a team that includes seasoned
healthcare technology company founders and entrepreneurs with operational public company experience and an unprecedented track
record for successfully effecting positive change. We believe the market opportunity is aligned with the advantages we bring to
a potential target.
Our
Team
Our
management team will be led by Hemant Taneja as Chairman and CEO; Glen Tullman as Director; Stephen K. Klasko, MD, MBA as Director;
Quentin Clark as Director; Jennifer Schneider, MD as Director; Anita V. Pramoda as Director; and Evan Sotiriou as COO.
The
team has entrenched relationships with one another, as well as a broad network within the healthcare and technology industry.
They are united by the common goal to digitize, transform, and unscale the healthcare industry for the benefit of all stakeholders.
Hemant
Taneja
Hemant
Taneja has been a managing director at General Catalyst since 2007 and the founder of the firm’s Silicon Valley operations.
Mr. Taneja partners with mission-driven founders building platform companies that are fundamentally aligned with the long-term
interests of society. Mr. Taneja is an early investor in market-leading companies across many sectors of the economy like
Anduril, Canva, Color, Gitlab, Grammarly, Gusto, Livongo, Ro, Samsara, Snap, and Stripe.
Mr. Taneja’s
primary investment thesis, known as “economies of unscale,” explores how 21st-century founders leverage AI-based mass
personalization techniques to innovate and build platforms across all sectors of the economy. In his 2018 book Unscaled,
Mr. Taneja builds on that thesis and articulates the need for accountability, transparency, and explainability in AI technologies
as they permeate deeper into daily life. Mr. Taneja’s piece in Harvard Business Review, “The Era of Move Fast
and Break Things is Over,” advocates for entrepreneurs and venture capitalists to adopt frameworks for responsible innovation
and investing.
Mr. Taneja
is also the founder and Executive Chairman of Commure, a company that has partnered with major health systems to modernize the
software infrastructure for the healthcare space since its inception in 2017. Mr. Taneja’s recently published book UnHealthcare,
co-authored with Dr. Klasko, lays out their thesis for how the healthcare system needs to transform into a health assurance
system to bring consumerism, affordability, and rational economic behavior to this important sector.
In
addition to his investment work, Mr. Taneja is the Co-Founder of Advanced Energy Economy, an organization focused on transforming
energy policy in America since 2011; and is a Founding Board Member of the Khan Lab School, a nonprofit K-12 school dedicated
to classroom innovation since 2014. Mr. Taneja sits on the Board of Fellows for the Stanford School of Medicine and teaches
a course at the college on A.I., Entrepreneurship, and Society. More recently, Mr. Taneja was featured in Business insider’s
“100 People Transforming Business” list.
Glen
Tullman
Glen
Tullman is the Executive Chairman and Founder of Livongo (NASDAQ: LVGO), the consumer first digital health pioneer committed to
empowering people with chronic conditions to live better and healthier lives. Mr. Tullman is dedicated to finding a cure
for diabetes and other chronic conditions—and to keeping people healthy until these cures are found.
A
visionary leader and entrepreneur, Mr. Tullman previously ran two public companies that changed how health care is delivered.
Before Livongo, Mr. Tullman served as Chief Executive Officer of Allscripts, which, during his tenure from 1998 to 2012,
was a leading provider of electronic health records, practice management, and electronic prescribing systems. Mr. Tullman
took Allscripts public in 1999. Prior to Allscripts, Mr. Tullman was Chief Executive Officer of Enterprise Systems from 1997
to 1998, which he also took public and then sold to McKesson/HBOC. Mr. Tullman is the author of On Our Terms: Empowering
the New Health Consumer, in which he proposes new solutions to address the chronic-condition epidemic facing our country.
A
strong proponent of philanthropy, Mr. Tullman was honored in 2019 with a Robert F. Kennedy Human Rights Ripple of Hope Award
for his career focused on improving the safety, empathy, and efficiency of our healthcare system. Mr. Tullman also serves
as a Chancellor to the International Board of the Juvenile Diabetes Research Foundation and as a Board Member of the American
Diabetes Association. Mr. Tullman has an undergraduate degree from Bucknell University (1981) and a Master of Arts from the University
of Oxford (1982).
Stephen
K. Klasko, MD, MBA
Dr. Stephen
Klasko has been a pioneer in using connected care to build health assurance for all—especially as we emerge from the COVID-19
crisis.
As
President and CEO of Philadelphia-based Thomas Jefferson University and Jefferson Health since 2013, Dr. Klasko has led one
of the U.S.’s fastest growing academic health institutions based on his vision of the future of higher education. Jefferson
Health focuses on managing the health of populations in southeastern Pennsylvania and southern New Jersey. Jefferson has the largest
faculty based telehealth network in the country, the NCI-designated Sidney Kimmel Cancer Center, and an outpatient footprint that
is among the most technologically advanced in the region.
This
year, Dr. Klasko published UnHealthcare, with Hemant Taneja, as well as the textbook, Patient No Longer:
Why Healthcare Must Deliver the Care Experience that Consumers Want and Expect.
Jefferson’s
14 hospitals handled the most patients with COVID-19 in Philadelphia during the Spring 2020 surge. The hospital’s strategy
included immediate universal masking, early exchange of research with Italy, and a history of longtime pandemic planning.
In
2020, Dr. Klasko was named the first Distinguished Fellow of the World Economic Forum.
Dr. Klasko
attended medical school in Philadelphia at Hahnemann University (1978), built his practice as an obstetrician in Allentown, and
served as dean of Drexel University’s College of Medicine (2000-2004). Dr. Klasko moved to Tampa, Florida, where he
was dean of the Morsani College of Medicine and CEO of USF Health at the University of South Florida (2004-2013).
Quentin
Clark
Quentin
Clark is a managing director at General Catalyst, a venture capital firm that partners with seed- to endurance-stage founders
to help build companies that withstand the test of time. Since joining in 2020, Mr. Clark focuses on investing in healthcare
and enterprise SaaS, software, and platforms concentrating on transforming the workplace. Since joining the firm, Mr. Clark
has made investments in Kernel, Minio, Range, Sprout, and several yet to be announced companies. Mr. Clark is on the boards
of Commure, Kernel, ThoughtSpot, Coda, and Minio.
Prior
to joining General Catalyst, Mr. Clark was CTO at Dropbox (NASDAQ: DBX) from 2017 to 2019, where he led the company’s
engineering, product, design, growth, and IT teams. Mr. Clark worked with them through its IPO, its pivot to Dropbox Spaces,
and drove the portfolio expansion, starting with the acquisition of HelloSign. Prior to Dropbox, Mr. Clark spent two decades
with Microsoft between 1994 and 2014, starting as a software engineer, then product manager, and eventually leading the whole
data platform business into Microsoft’s cloud, Azure. Mr. Clark then joined SAP from 2014 to 2016, first as CTO, then
as Chief Business Officer, where he led strategy and product direction for the platform and ultimately for the company.
Mr. Clark
is a graduate of the University of Massachusetts at Amherst (1994), where he earned a B.S. in Physics and double-majored in Computer
Science and currently sits on the Advisory Board for the College of Information & Computer Sciences.
Jennifer
Schneider, MD
Dr. Jennifer
Schneider has been the President of Livongo since 2018, where she is responsible for product, data science, engineering, marketing,
clinical operations, and growth strategy. Dr. Schneider previously served as the company’s Chief Medical Officer from
2015 to 2018, where she led the company’s strategic clinical product vision, data science, clinical trials, and the organization’s
certified diabetes educators and coaches. Dr. Schneider is the author of Decoding Health Signals: Silicon Valley’s
Consumer-First Approach to a New Era of Health, which offers a guide to the depth of the chronic conditions problem facing
the industry today and explores how companies are using big data analytics and artificial intelligence to reinvent care delivery
for people with chronic conditions. Dr. Schneider was recently named to Modern Healthcare’s List of Top Clinical Executives.
Prior
to Livongo, Dr. Schneider held several key leadership roles at Castlight from 2010 to 2015, most recently as Chief Medical
Officer. Dr. Schneider also has held leadership roles as a health outcomes researcher and Chief Resident at Stanford University
from 2005 to 2006, and she has practiced medicine as an attending physician at Stanford University, the VA Palo Alto Health Care
System, and Kaiser Permanente. Dr. Schneider has an undergraduate degree from the College of the Holy Cross (1997), a Doctor
of Medicine degree from Johns Hopkins School of Medicine(2002), and a Master of Science degree in Health Services Research from
Stanford University (2010). Dr. Schneider completed her internal medicine residency at Stanford University Hospital.
Anita
V. Pramoda
Anita
V. Pramoda has been the CEO of Owned Outcomes, Inc., a health analytics software company, since 2014. Ms. Pramoda has also
served as the Chairperson of the Board of Directors of the Federal Reserve Bank of San Francisco (Los Angeles) since 2016, and
as a board member (and Chair of Compensation Committee) of Health Catalyst, Inc., (NASDAQ: HCAT), a provider of data and analytics
technology and services to healthcare organizations, since 2016. Since 2020, Ms. Pramoda has also been a board member (and
Chair of Audit Committee) of GoHealth (NASDAQ: GOCO), a digital marketplace for health insurance.
Previously,
Ms. Pramoda served as a member of the board of directors of Dignity Health Foundation, from 2013 to 2017, Allscripts Healthcare,
LLC (NASDAQ: MDRX), from 2013 to 2016, and as Chief Financial Officer at Epic Systems Corporation, from 2009 to 2012. Ms. Pramoda
holds a Master in Business Administration degree from the University of Pennsylvania—The Wharton School (2004).
Evan
Sotiriou
Evan
Sotiriou has served in several senior management capacities of General Catalyst since 2019. Prior to that, Mr. Sotiriou served
as the CFO for OrbiMed, which invests globally across the healthcare industry, from 2011 to 2019. Mr. Sotiriou also acted
as the Vice President of GSC Group from 2000 to 2008, Managing Director of Clearlake Capital Management, L.P. from 2008 to 2010
and subsequently as the Chief Financial Officer for Archer Capital Management, L.P. from 2010 to 2011. Mr. Sotiriou holds
an AB from Dartmouth College.
Background
on Health Assurance Acquisition Corp.
Health
Assurance Acquisition Corp. is a recently formed company by Hemant Taneja, Glen Tullman, Stephen Klasko MD, MBA, Quentin Clark,
Jennifer Schneider, MD, Anita V. Pramoda and Evan Sotiriou, to execute its part in a broad mission of enabling the digital transformation
of care, bringing disruptive innovation to the healthcare system through technology.
Health
Assurance Acquisition Corp. is structured to reflect the economic transformation of the industry. To achieve our mission, we have
formed a new structure to remove friction, align stakeholder interests, and reward sustained, long-term performance. We call this
new vehicle SAILSM, or Stakeholder Aligned Initial Listing. The incentive structure of the typical SPAC creates misalignment
with target businesses and public market investors: the sponsor is entitled to a return of the sponsor shares regardless of the
SPAC’s performance, and dilution attributable to sponsor shares is borne immediately. The SAILSM construct, however,
uses a performance-based incentive structure to create alignment, designed to replicate a stock price-based return in the public
markets:
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Under
the SAILSM structure, our initial stockholders will capture 20% to 30% of the year-over-year
share-price performance (20% for first 30% performance, 30% thereafter) on all capital
raised in connection with the transaction, which will include gross proceeds from the
initial public offering and any subsequent capital raised in connection with the merger.
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Our
economics are contingent upon sustained performance—our initial stockholders will
not earn returns on our alignment shares until our other stockholders do.
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Dilution
will occur over time, also contingent upon sustained performance.
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We
believe this economic alignment is consistent with our core beliefs and values, and coupled with the strength and credibility
of our team, will help to attract the best entrepreneurs. HAAC is not simply a liquidity vehicle—it is an opportunity
to bring a transformational company to the public markets.
We
have also assembled a strong sponsor team that we believe will provide us with valuable strategic, operational, product management,
analytical, financial, transactional, communications, legal, and other expertise and networks that we will leverage to identify
and execute a business combination and drive future value for the combined business.
Our
Value-Add
We
believe our founder-first ethos, our unique wealth of experience transforming industries through innovation, our commitment to
building enduring companies, and our focus on a consumer-centric model give us a huge advantage in our quest to source and attract
best-in-class, disruptive companies which sit at the intersection between healthcare, technology, and the consumer.
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Pioneers
in Health Assurance: Our team has crystallized a coherent vision of the future
of healthcare through health assurance, and successfully executed on this vision with
Livongo. We believe this unparalleled focus and experience will enable us to provide
invaluable advice to management teams of other early-stage health assurance companies
with the potential to be market leaders in their categories.
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Cross-industry,
cross-disciplinary talent: Our team has created and operated multi-billion dollar
companies in the technology, healthcare, and tech-enabled healthcare spaces. Many of
these experiences were shared endeavors by members of our cross-disciplinary team. We
have demonstrated a talent for spotting winning trends at the intersection of healthcare
and technology, and building companies to capitalize on these.
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Experts
in unscaled healthcare at scale: Health assurance calls for a new era of care
that is personalized and ‘unscaled’ using AI-based techniques. We have deep
experience in mass personalization techniques that enable platforms to provide care that
feels tailored to the patient, even as they grow to serve hundreds of thousands and even
millions of consumers.
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Deep
networks: Our deep networks serve as a tool to find the best businesses and
to match founders with top talent to fill areas of need and grow their businesses efficiently
and intelligently.
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Impressive
track record: We have an outstanding investment track record demonstrating a
commitment to our strategy and core values, robust shareholder returns, and development
of enduring businesses, including Airbnb, Livongo, Oscar, Snap, Stripe, and others.
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Mission-driven,
principled: Our methods are rooted in respect for strong governance, responsible
innovation, and a desire to nurture diversity, creativity, and mindfulness.
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Our
Business Strategy
We
are in the early stages of a digital transformation of healthcare and have thought strategically about the framework needed to
affect change. Our goal is to invest in platforms that help accelerate a system of health assurance, a new category
of innovation that delivers modern consumer health experiences while decreasing the overall healthcare GDP. In partnership with
existing care providers, health assurance companies can accelerate rational economic behavior with innovative business models
and price transparency in their offerings. We want to elevate care away from the reactive, scaled, one-size-fits-all offering
it currently operates in and transition from “sick care” to “health assurance.” We will facilitate this
paradigm shift through technologies like telehealth consultations, connected devices, and AI-driven interactions, built upon open
technology standards and empathetic user design.
Our
experience building Livongo has demonstrated that health assurance companies can generate both positive clinical outcomes and
outsized economic returns. By eliminating the hassle of managing chronic conditions, designing the experience around the individual
and whole-person care, and building trust with members, we defined a new market category and demonstrated public market success.
Livongo and chronic disease management were just the beginning. There is a myriad of consumer personas that deserve the same excellent
care experiences, and there are dozens of infrastructure companies required to support this sectoral shift.
Our
strategy, based on our core beliefs and values, is to identify a business combination where we can play an impactful role in partnership
with a data-driven, cloud-based, consumer-centric business positioned to affect change in a sick, rigid and broken healthcare
system. Our mission is to create a new kind of healthcare experience that works like consumer experiences in other industries,
with free-market economics and optimization of patient outcomes. Instead of improving inflexible systems, we want to reinvent
these systems, to bend the cost and quality curve, and to overcome the entrenched resistance to change. We want to empower good
ideas and disruptive technologies to improve outcomes for the most important consumer—the patient. We believe that if you
create a great user experience of value, you have an open road to building a multi-billion dollar success story like Livongo,
Airbnb, or Stripe.
We
are looking for companies that are aligned with the health assurance thesis, are led by a mission-driven CEO who is committed
to responsible innovation, and have high growth potential in markets with TAM expansion opportunities. We are interested in companies
building persona-driven consumer experiences that leverage AI feedback loops, virtual healthcare services that increase access
and affordability, new models to manage risk and pay for care, cloud infrastructure that helps generate data and enables the development
of many health assurance companies, and modern workflows for health systems and providers.
Using
this framework, we are creating HAAC to identify companies that can be transformed into category leaders best positioned in the
public markets. We believe we are well placed to help a transformational company, aligned with our philosophy, to the public markets,
and then to help it grow, thrive, and succeed in its mission. Our partnership has value far beyond our capital, unlocking the
potential of a disruptive business to revolutionize care, supported by our team’s deep industry, operational and product
experience, extensive networks, and track records as investors, advisors, executives, and board members. Our alignment with the
economic transformation of the industry will make this a vehicle with which the best entrepreneurs will want to work.
Business
Combination Criteria
While
we may decide to enter into a business combination with a business that does not meet these criteria, we intend to seek a business
combination:
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sitting
at the intersection between technology and healthcare, including consumer-focused, data-driven,
cloud-based platforms;
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that
has the potential to change the healthcare system to benefit the consumer (built with
empathy, cuts down costs, and prioritizes personalization and consumer outcomes);
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where
we can materially impact the value and growth of the company in partnership with management;
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close
to our proximal networks of founders, operators, investors, and advisors; and
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where
we have a differentiated view on the ability of the target to create value as a public
company.
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We
anticipate offering the following benefits to our business combination partner:
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partnership
with our management team members who have extensive and proven track records of founding,
operating, advising, and investing in market-leading technology and healthcare companies;
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access
to our network of leading industry executives, entrepreneurs, and investors;
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increase
company presence and visibility with customers, employers, payors, and vendors;
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higher
engagement with core, relevant, fundamental investors as anchor stockholders than a traditional
IPO book-building process would offer;
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lower
risk and expedited path to a public listing with flexible structuring;
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infusion
of cash and ongoing access to public capital markets;
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listed
public currency for future acquisitions and growth;
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ability
for management to retain control and focus on growing the business; and
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opportunity
to motivate and retain employees using stock-based compensation.
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Status
as a Public Company
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
with us. In a business combination transaction with us, the owners of the target business may, for example, exchange their shares
of stock in the target business for our shares of Class A common stock (or shares of a new holding company) or for a combination
of our shares of Class A common stock and cash, allowing us to tailor the consideration to the specific needs of the sellers.
We believe target businesses will find this method a more expeditious and cost effective method to becoming a public company than
the typical initial public offering. The typical initial public offering process takes a significantly longer period of time than
the typical business combination transaction process, and there are significant expenses in the initial public offering process,
including underwriting discounts and commissions, that may not be present to the same extent in connection with a business combination
with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions,
which could delay or prevent the offering from occurring or have negative valuation consequences. Once public, we believe the
target business would then have greater access to capital, an additional means of providing management incentives consistent with
stockholders’ interests and the ability to use its shares as currency for acquisitions. Being a public company can offer
further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented
employees.
While
we believe that our structure and our management team’s backgrounds will make us an attractive business partner, some potential
target businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek
stockholder approval of any proposed initial business combination, negatively.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act.
As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply
with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved, If
some investors find our securities less attractive as a result, there may be a less active trading market for our securities and
the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the
extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting
standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until
those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition
period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth
anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least
$1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares
of Class A common stock that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the
date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Financial
Position
With
funds available for a business combination initially in the amount of $535,000,000, we offer a target business a variety of options
such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations
or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete our business combination using
our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination
that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have
not taken any steps to secure third-party financing and there can be no assurance it will be available to us.
Effecting
Our Initial Business Combination
General
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following our initial
public offering. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering
and the sale of the private placement warrants, our equity, debt or a combination of these as the consideration to be paid in
our initial business combination. We may seek to complete our initial business combination with a company or business that may
be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent
in such companies and businesses.
If
our initial business combination is paid for using equity or debt, 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 shares
of 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-business combination 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
have not selected any business combination target. Additionally, we have not engaged or retained any agent or other representative
to identify or locate any suitable acquisition candidate, to conduct any research or take any measures, directly or indirectly,
to locate or contact a target business, other than our officers and directors. Although our management will assess the risks inherent
in a particular target business with which we may combine, we cannot assure you that this assessment will result in our identifying
all risks that a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that we
can do nothing to control or reduce the chances that those risks will adversely affect a target business.
We
may need to obtain additional financing to complete our initial business combination, either because the transaction requires
more cash than is available from the proceeds held in our trust account, or because we become obligated to redeem a significant
number of our public shares upon completion of the business combination, in which case we may issue additional securities or incur
debt in connection with such business combination. There are no prohibitions on our ability to issue securities or incur debt
in connection with our initial business combination. We are not currently a party to any arrangement or understanding with any
third-party with respect to raising any additional funds through the sale of securities, the incurrence of debt or otherwise.
Sources
of Target Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
market participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises.
Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls
or mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited
basis, since some of these sources will have read our prospectus or other materials and know what types of businesses we are targeting.
Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates that they
become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well
as attending trade shows or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities that
would not otherwise necessarily be available to us as a result of the business relationships of our officers and directors. While
we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions
on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s
fee, consulting fee or other compensation to be determined in an arm’s-length negotiation based on the terms of the transaction.
We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities to us that
may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management
determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction,
in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will our sponsor or
any of our existing officers or directors, or their respective affiliates paid by us any finder’s fee, consulting fee or
other compensation prior to, or for any services they render in order to effectuate, the completion of our initial business combination
(regardless of the type of transaction that it is). We have agreed to pay an affiliate of our sponsor a total of $10,000 per month
for office space, secretarial and administrative support and to reimburse our sponsor for any out-of-pocket expenses related to
identifying, investigating and completing an initial business combination. Some of our officers and directors may enter into employment
or consulting agreements with the post-business combination company following our initial business combination. The presence or
absence of any such fees or arrangements will not be used as a criterion in our selection process of an acquisition candidate.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our initial stockholders,
Founders, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated
with our initial stockholders or any of our officers or directors, we, or a committee of independent directors, will obtain an
opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm that such initial
business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any
other context.
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, including entities that are affiliates of our initial stockholders, pursuant to which such officer or director
is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors
becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary
or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination
opportunity to such entity, subject to their fiduciary duties under Delaware law. See “Management—Conflicts of Interest.”
Evaluation
of a Target Business and Structuring of Our Initial Business Combination
In
evaluating a prospective target business, we expect to conduct an extensive due diligence review which may encompass, as applicable
and among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers,
inspection of facilities and a review of financial and other information about the target and its industry. We will also utilize
our management team’s operational and capital planning experience. If we determine to move forward with a particular target,
we will proceed to structure and negotiate the terms of the business combination transaction.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of, and negotiation with, a prospective target business with which our initial business combination
is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business
combination. The company will not pay any consulting fees to members of our management team, or their respective affiliates, for
services rendered to or in connection with our initial business combination. In addition, we have agreed not to enter into a definitive
agreement regarding an initial business combination without the prior consent of our sponsor.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. By completing our initial business combination with only a single
entity, our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which
may have a substantial adverse impact on the particular industry in which we operate
after our initial business combination; and
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cause
us to depend on the marketing and sale of a single product or limited number of products
or services.
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Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting
our initial business combination with that business, our assessment of the target business’s management may not prove to
be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public
company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated
with any certainty. The determination as to whether any of the members of our management team will remain with the combined company
will be made at the time of our initial business combination. While it is possible that one or more of our directors will remain
associated in some capacity with us following our initial business combination, it is unlikely that any of them will devote their
full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members of our
management team will have significant experience or knowledge relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company.
The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our
initial business combination.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve Our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC subject to the provisions of
our amended and restated certificate of incorporation. However, we will seek stockholder approval if it is required by applicable
law or stock exchange listing requirement, or we may decide to seek stockholder approval for business or other reasons.
Under
Nasdaq’s listing rules, stockholder approval would typically be required for our initial business combination if, for example:
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we
issue common stock that will be equal to or in excess of 20% of the number of our common
stock then-outstanding (other than in a public offering);
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any
of our directors, officers or substantial security holder (as defined by the Nasdaq rules)
has a 5% or greater interest, directly or indirectly, in the target business or assets
to be acquired or otherwise and the present or potential issuance of common stock could
result in an increase in issued and outstanding common stock or voting power of 1% or
more (or 5% or more if the related party involved is classified as such solely because
such person is a substantial security holder); or
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the
issuance or potential issuance of common stock will result in our undergoing a change
of control.
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Permitted
Purchases of Our Securities
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our initial stockholders, directors, executive officers, advisors or
their affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior
to or following the completion of our initial business combination. 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. If they engage in such transactions,
they will be restricted from making any such purchases when they are in possession of any material non-public information not
disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act.
In
the event that our initial stockholders, 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. We do not currently anticipate that such purchases,
if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction
subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases
that the purchases are subject to such rules, the purchasers will comply with such rules.
The
purpose of any such purchases of shares could be to (i) vote such shares in favor of the initial business combination and
thereby increase the likelihood of obtaining stockholder approval of the initial business combination or (ii) to satisfy
a closing condition in an agreement with a candidate for our initial business combination that requires us to have a minimum net
worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would
otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding
or to vote such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination.
Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have
been possible.
In
addition, if such purchases are made, the public “float” of our shares of Class A common stock or public warrants
may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain
or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our
initial stockholders, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom
our initial stockholders, officers, directors or their affiliates may pursue privately negotiated transactions by either the stockholders
contacting us directly or by our receipt of redemption requests submitted by stockholders (in the case of shares of Class A
common stock) following our mailing of tender offer or proxy materials in connection with our initial business combination. To
the extent that our initial stockholders, officers, directors, advisors or their affiliates enter into a private transaction,
they would identify and contact only potential selling or redeeming stockholders who have expressed their election to redeem their
shares for a pro rata share of the trust account or vote against our initial business combination, whether or not such stockholder
has already submitted a proxy with respect to our initial business combination but only if such shares have not already been voted
at the stockholder meeting related to our initial business combination. Our initial stockholders, executive officers, directors,
advisors or their affiliates will select which stockholders to purchase shares from based on the negotiated price and number of
shares and any other factors that they may deem relevant, and will be restricted from purchasing shares if such purchases do not
comply with Regulation M under the Exchange Act and the other federal securities laws.
Our
initial stockholders, officers, directors and/or their affiliates will be restricted from making purchases of shares if the purchases
would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. We expect any such purchases would be reported by such
person pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting
requirements.
Redemption
Rights for Public Shareholders upon Completion of Our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock
upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account calculated as of two business days prior to the consummation of the initial business combination,
including interest earned on the funds held in the trust account (net of permitted withdrawals and up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding public shares, subject to the limitations
described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. Our initial stockholders,
officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption
rights with respect to any alignment shares and public shares they may hold in connection with the completion of our initial business
combination.
Limitations
on Redemptions
Our
amended and restated certificate of incorporation will provide that in no event will we redeem our public shares in an amount
that would cause our net tangible assets to be less than $5,000,001. In addition, our proposed initial business combination may
impose a minimum cash requirement for: (i) cash consideration to be paid to the target candidate or its owners; (ii) cash
for working capital or other general corporate purposes; or (iii) the retention of cash to satisfy other conditions. In the
event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly
submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed
initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination
or redeem any shares in connection with such initial business combination, and all shares of Class A common stock submitted
for redemption will be returned to the holders thereof.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion
of our initial business combination either (i) in connection with a stockholder meeting called to approve the business combination
or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination
or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the
timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under applicable
law or stock exchange listing requirement or whether we were deemed to be a foreign private issuer (which would require a tender
offer rather than seeking stockholder approval under SEC rules). Asset acquisitions and share 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
5% of our shares of outstanding common stock or seek to amend our amended and restated certificate of incorporation would require
stockholder approval. We currently intend to conduct redemptions in connection with a stockholder vote unless stockholder approval
is not required by applicable law or stock exchange listing requirement and we choose to conduct redemptions pursuant to the tender
offer rules of the SEC for business or other legal reasons. So long as we obtain and maintain a listing for our securities on
the Nasdaq, we will be required to comply with the Nasdaq rules.
If
we held a stockholder vote to approve our initial business combination, we will, pursuant to our amended and restated certificate
of incorporation:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A
of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to
the tender offer rules; and
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file
proxy materials with the SEC.
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In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the common stock, represented
in person or by proxy and entitled to vote thereon, voted at a stockholder meeting are voted in favor of the business combination.
In such case, our initial stockholders and each member of our management team have agreed to vote their alignment shares and public
shares in favor of our initial business combination. As a result, in addition to our initial purchaser’s alignment shares,
we would need 19,687,500, or 37.5%, of the 52,500,000 public shares sold in our initial public offering to be voted in favor of
an initial business combination in order to have our initial business combination approved (assuming all outstanding shares are
voted), of the 52,500,000 public shares sold in our initial public offering to be voted in favor of an initial business combination
in order to have our initial business combination approved. Each public stockholder may elect to redeem their public shares irrespective
of whether they vote for or against the proposed transaction or vote at all. In addition, our initial stockholders and each member
of our management team have entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights
with respect to any alignment shares and public shares held by them in connection with (i) the completion of a business combination
and (ii) a stockholder vote to approve an amendment to our amended and restated certificate of incorporation (A) that
would modify the substance or timing of our obligation to provide holders of our shares of Class A common stock the right
to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we
do not complete our initial business combination within 24 months from the closing of our initial public offering (or such
later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend
such date, voting together as a single class) or (B) with respect to any other provision relating to the rights of holders
of our shares of Class A common stock.
If
we conduct redemptions pursuant to the tender offer rules of the SEC, we will, pursuant to our amended and restated certificate
of incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act,
which regulate issuer tender offers; and
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file
tender offer documents with the SEC prior to completing our initial business combination
which contain substantially the same financial and other information about the initial
business combination and the redemption rights as is required under Regulation 14A
of the Exchange Act, which regulates the solicitation of proxies.
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Upon
the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules,
we and our initial stockholders will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of
Class A common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business
days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business
combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders
not tendering more than the number of public shares we are permitted to redeem. If public stockholders tender more shares than
we have offered to purchase, we will withdraw the tender offer and not complete such initial business combination.
Limitation
on Redemption upon Completion of Our Initial Business Combination If We Seek Shareholder Approval
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that
a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting
in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming
its shares with respect to more than an aggregate of 15% of the shares sold in our initial public offering, which we refer to
as “Excess Shares,” without our prior consent. We believe this restriction will discourage stockholders from accumulating
large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against
a proposed business combination as a means to force us or our management to purchase their shares at a significant premium to
the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an
aggregate of 15% of the shares sold in our initial public offering could threaten to exercise its redemption rights if such holder’s
shares are not purchased by us, our initial stockholders or our management at a premium to the then-current market price or on
other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in our initial
public offering without our prior consent, we believe we will limit the ability of a small group of stockholders to unreasonably
attempt to block our ability to complete our initial business combination, particularly in connection with a business combination
with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash.
However,
we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against
our initial business combination.
Tendering
Share Certificates in Connection with a Tender Offer or Redemption Rights
Public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street
name,” will be required to either tender their certificates (if any) to our transfer agent prior to the date set forth in
the proxy solicitation or tender offer materials, as applicable, mailed to such holders, or to deliver their shares to the transfer
agent electronically using The Depository Trust Company’s DWAC (Deposit/ Withdrawal At Custodian) System (the “DWAC
System”), at the holder’s option, in each case up to two business days prior to the initially scheduled vote to approve
the business combination. 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 indicate the applicable 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 business days prior to the initially scheduled vote on the proposal to approve the business combination if we distribute
proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively
short period in which to exercise redemption rights, it is advisable for stockholders to use electronic delivery of their public
shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker a fee of approximately $80.00 and
it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred
regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver
shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
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 shares 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 stockholder’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 two business days prior to the initially scheduled
vote on the proposal to approve the business combination, unless otherwise agreed to by us. Furthermore, if a holder of a public
share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable
date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically
or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their
shares will be distributed promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account.
In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different
target until 24 months from the closing of our initial public offering (or such later date as approved by holders of a majority
of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single class).
Redemption
of Public Shares and Liquidation If No Initial Business Combination
Our
amended and restated certificate of incorporation will provide that we will have only 24 months from the closing of our initial
public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted
at a meeting to extend such date, voting together as a single class) to consummate an initial business combination. If we have
not consummated an initial business combination within 24 months from the closing of our initial public offering (or such
later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend
such date, voting together as a single class), we will: (i) cease all operations except for the purpose of winding up; (ii) as
promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held
in the trust account and not previously released to us to pay our taxes, if any (less up to $100,000 of interest to pay dissolution
expenses) divided by the number of the then-outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any);
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions
with respect to our warrants, which will expire worthless if we fail to consummate an initial business combination within 24 months
from the closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding
common stock that are voted at a meeting to extend such date, voting together as a single class). Our amended and restated certificate
of incorporation will provide that, if we wind up for any other reason prior to the consummation of our initial business combination,
we will follow the foregoing procedures with respect to the liquidation of the trust account as promptly as reasonably possible
but not more than ten business days thereafter.
Our
initial stockholders and each member of our management team have entered into an agreement with us, pursuant to which they have
agreed to waive their rights to liquidating distributions from the trust account with respect to any alignment shares they hold
if we fail to consummate an initial business combination within 24 months from the closing of our initial public offering,
or such later date as described in the preceding paragraph (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 initial business combination within the prescribed
time frame).
Our
initial stockholders, 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) that would modify the
substance or timing of our obligation to provide holders of our shares of Class A common stock the right to have their shares
redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our
initial business combination within 24 months from the closing of our initial public offering (or such later date as approved
by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together
as a single class) or (B) with respect to any other provision relating to the rights of holders of our shares of Class A
common stock, unless we provide our public stockholders with the opportunity to redeem their public shares upon approval of any
such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest earned on the funds held in the trust account and not previously released to us to pay our taxes, if any, divided
by the number of the then-outstanding public shares. However, we may not redeem our public shares in an amount that would
cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny
stock” rules). If this optional redemption right is exercised with respect to an excessive number of public shares such
that we cannot satisfy the net tangible asset requirement, we would not proceed with the amendment or the related redemption of
our public shares at such time. This redemption right shall apply in the event of the approval of any such amendment, whether
proposed by our initial stockholders, any executive officer, director or director nominee, or any other person.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors,
will be funded from amounts remaining out of the $4,600,000 of proceeds held outside the trust account plus up
to $100,000 of funds from the trust account available to us to pay dissolution expenses, although we cannot assure you that there
will be sufficient funds for such purpose.
If
we were to expend all of the net proceeds of our initial public offering and the sale of the private placement warrants, other
than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account,
the per-share redemption amount received by stockholders upon our dissolution would be $10.00. The proceeds deposited in the trust
account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our
public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not be less
than $10.00. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide
for all creditors’ claims.
Although
we will seek to have all vendors, service providers (except our independent registered public accounting firm), prospective target
businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim
of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that
they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against
the trust account including, but not limited, to fraudulent inducement, breach of fiduciary responsibility or other similar claims,
as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim
against our assets, including the funds held in the trust account. If any third-party refuses to execute an agreement waiving
such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to
it and will only enter into an agreement with a third-party that has not executed a waiver if management believes that such third-party’s
engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage
a third-party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or
skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver
or in cases where management is unable to find a service provider willing to execute a waiver. The underwriters of our initial
public offering will not execute an agreement with us waiving such claims to the monies held in the trust account. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason.
In order to protect the amounts held in the trust account, our sponsor has agreed that it will be liable to us if and to the extent
any claims by a third-party for services rendered or products sold to us (other than our independent registered public accounting
firm), or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts
in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share
held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per public share due to reductions
in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations; provided that
such liability will not apply to any claims by a third-party or prospective target business that executed a waiver of any and
all rights to seek access to the trust account nor will it apply to any claims under our indemnity of the underwriters of our
initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed
waiver is deemed to be unenforceable against a third-party, our sponsor will not be responsible to the extent of any liability
for such third-party claims. 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 we believe that our
sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy
those obligations. None of our officers or directors will indemnify us for claims by third parties, including, without limitation,
claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per public share and (ii) the
actual amount per public share held in the trust account as of the date of the liquidation of the trust account if less than $10.00
per public share due to reductions in the value of the trust assets, in each case net of the amount of interest which may be withdrawn
to pay our income tax obligations, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that
it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take
legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that
our independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly,
we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than
$10.00 per public share.
We
will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers (except our independent registered public accounting firm), prospective target businesses
or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind
in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. We will have access
to up to $4,600,000 from the proceeds of our initial public offering and the sale of the private placement warrants with which
to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated
to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that the reserve
for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims
made by creditors, however such liability will not be greater than the amount of funds from our trust account received by any
such stockholder. In the event that our offering expenses exceed our estimate of $4,600,000, we may fund such excess with funds
from the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account
would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $4,600,000,
the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of the funds in 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 24 months from
the closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding
common stock that are voted at a meeting to extend such date, voting together as a single class) may be considered a liquidating
distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL
intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which
any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims
brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability
of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata
share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution.
Furthermore,
if the pro rata portion of the funds in 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 24 months from the closing of our initial
public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted
at a meeting to extend such date, voting together as a single class), is not considered a liquidating distribution under Delaware
law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party
may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute
of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years,
as in the case of a liquidating distribution. If we do not complete our initial business combination within 24 months from
the closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding
common stock that are voted at a meeting to extend such date, voting together as a single class), we will: (i) cease all
operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the trust account including interest earned on the funds held in the trust account (net of permitted withdrawals and up to $100,000
of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating
distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem
our public shares as soon as reasonably possible following our 24th month and, therefore, we do not intend to comply with those
procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them
(but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known
to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought
against us within the subsequent 10 years. However, because we are a recently organized company established for the purpose
of identifying a company to partner with in order to effectuate a merger, share exchange, asset acquisition, share purchase, reorganization
or similar initial business combination, rather than an operating company, and our operations will be limited to searching for
prospective candidates for our initial business combination to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, etc.) or prospective candidates for our initial business combination. As described above,
pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers (except
for our independent registered public accounting firm), prospective candidates for our initial business combination or other entities
with which we do business (other than our independent registered public accounting firm) execute agreements with us waiving any
right, title, interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation, the
claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability
extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts
in the trust account are not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held
in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in
each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims under our indemnity of
the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. In
the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to
the extent of any liability for such third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, we cannot assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we
file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts
received by our stockholders.
Furthermore,
our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith,
and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account
prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our
public shares if we do not complete our initial business combination within 24 months from the closing of our initial public
offering (or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted at
a meeting to extend such date, voting together as a single class), (ii) 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 24 months from the closing of our initial public offering
(or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting
to extend such date, voting together as a single class) or with respect to any other material provisions relating to stockholders’
rights or pre-initial business combination activity or (iii) if they redeem their respective shares for cash upon the completion
of our initial business combination. In no other circumstances will a stockholder have any right or interest of any kind to or
in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with the initial business combination alone will not result in a stockholder’s redeeming its shares
to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights
described above. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended
and restated certificate of incorporation, may be amended with a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we 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, public companies, operating businesses seeking strategic acquisitions. Many of these entities are
well established and have extensive experience identifying and effecting business combinations directly or through affiliates.
Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire
larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage
in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders
who exercise their redemption rights may reduce the resources available to us for our initial business combination and our outstanding
warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either
of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Facilities
We
currently maintain our executive offices at 20 University Road, Cambridge, Massachusetts 02138. The cost for our use of this space
is included in the $10,000 per month fee we will pay to an affiliate of our sponsor for office space, administrative and support
services. We consider our current office space adequate for our current operations.
Employees
We
currently have two executive officers. These individuals are not obligated to devote any specific number of hours to our matters
but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business
combination. The amount of time they will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the stage of the business combination process we are in. We do not intend to have any
full time employees prior to the completion of our initial business combination.
Periodic
Reporting and Financial Information
Our
securities are registered under the Exchange Act and have reporting obligations, including the requirement that we file annual,
quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, this annual report contains
financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of the proxy solicitation
or tender offer materials, as applicable, sent to stockholders. These financial statements may be required to be prepared in accordance
with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required
to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential
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 initial business combination within the prescribed time frame.
We cannot assure you that any particular target business identified by us as a potential acquisition candidate will have financial
statements prepared in accordance with the requirements outlined above, or that the potential target business will be able to
prepare its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot
be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential acquisition candidates,
we do not believe that this limitation will be material.
We
will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2021 as required by
the Sarbanes-Oxley Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer and no longer
qualify as an emerging growth company, will we not be required to comply with the independent registered public accounting firm
attestation requirement on our internal control over financial reporting. A target business may not be in compliance with the
provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of
any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such
acquisition.
We
filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange
Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current intention
of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation
of our initial business combination.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act.
As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply
with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If
some investors find our securities less attractive as a result, there may be a less active trading market for our securities and
the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the
extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting
standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until
those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition
period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth
anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least
$1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares
of Class A common stock that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the
date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
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 prior June 30, 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 prior June 30.
Item
1A. Risk Factors
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this 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.
We
have no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We
were formed in September 8, 2020 and have no operating results. Because we lack an operating history, you have no basis upon which
to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target
businesses. We have no plans, arrangements or understandings with any prospective target business concerning a business combination
and may be unable to complete our initial business combination. If we fail to complete our initial business combination, we will
never generate any operating revenues.
Past
performance by our management team or their respective affiliates may not be indicative of future performance of an investment
in us.
Information
regarding performance is presented for informational purposes only. Any past experience or performance of our management team
and their respective affiliates is not a guarantee of either (i) our ability to successfully identify and execute a transaction
or (ii) success with respect to any business combination that we may consummate. You should not rely on the historical record
of our management team or their respective affiliates as indicative of the future performance of an investment in us or the returns
we will, or are likely to, generate going forward. Our management has no experience in operating special purpose acquisition companies.
Our
stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete
our initial business combination even though a majority of our stockholders do not support such a combination.
We
may choose not to hold a stockholder vote before we complete our initial business combination if the business combination would
not require stockholder approval under applicable law or stock exchange listing requirement. For instance, if we were seeking
to acquire a target business where the consideration we were paying in the transaction was all cash, we would typically not be
required to seek stockholder approval to complete such a transaction. Except for as required by applicable law or stock exchange
listing requirement, the decision as to whether we will seek stockholder approval of a proposed business combination or will allow
stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a
variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us
to seek stockholder approval. Accordingly, we may complete our initial business combination even if holders of a majority of our
issued and outstanding shares of Class A common stock do not approve of the business combination we complete.
Your
only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of
your right to redeem your shares from us for cash.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any
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, your only opportunity to affect the investment decision regarding a potential business combination may be limited
to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender
offer documents mailed to our public stockholders in which we describe our initial business combination.
If
we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such
initial business combination, regardless of how our public stockholders vote.
Our
initial stockholders own 20% of the voting power of our common stock immediately following the completion of our public offering.
Our initial stockholders and members of our management team also may from time to time purchase shares of Class A common
stock prior to our initial business combination. Our amended and restated certificate of incorporation will provide that, if we
seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common
stock, represented in person or by proxy and entitled to vote thereon, voted at a stockholder meeting are voted in favor of the
business combination. As a result, in addition to our initial stockholders’ alignment shares, we would need 19,687,500,
or 37.5% of the 52,500,000 shares sold in our initial public offering to be voted in favor of an initial business combination
in order to have our initial business combination approved. Accordingly, if we seek stockholder approval of our initial business
combination, the agreement by our initial stockholders and each member of our management team to vote in favor of our initial
business combination will increase the likelihood that we will receive the requisite stockholder approval for such initial business
combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a 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 to be less than
$5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules). Consequently, if accepting
all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount
necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business
combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and,
thus, may be reluctant to enter into a business combination transaction with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us
to complete the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise
their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares
that will be submitted for redemption. If a large number of shares are submitted for redemption, we may need to restructure the
transaction to reserve a greater portion of the cash in the trust account or arrange for additional 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 amount of the deferred underwriting commissions payable to the underwriters will not be adjusted
for any shares that are redeemed in connection with an initial business combination. The per-share amount we will distribute to
stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after
such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the
probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order
to redeem your shares.
If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the funds
in 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 consummate an initial business combination within 24 months after the closing of our initial public offering
(or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting
to extend such date, voting together as a single class) may give potential target businesses leverage over us in negotiating a
business combination and may limit the time we have in which to conduct due diligence on potential business combination targets,
in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination
on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must consummate
an initial business combination within 24 months from the closing of our initial public offering (or such later date as approved
by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together
as a single class). Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing
that if we do not complete our initial business combination with that particular target business, we may be unable to complete
our initial business combination with any target business. This risk will increase as we get closer to the time frame described
above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms
that we would have rejected upon a more comprehensive investigation.
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 recent coronavirus (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, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus
disease (“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 and a significant outbreak of other infectious diseases could result in a widespread
health crisis that could adversely affect the economies and financial markets worldwide, and the business of any potential target
business with which we consummate a business combination could be materially and adversely affected. Furthermore, we may be unable
to complete a business combination if continued concerns relating to COVID-19 continues to restrict travel, limit the ability
to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable
to negotiate and consummate a transaction in a timely manner. 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, decreased market liquidity in
third-party financing being unavailable on terms acceptable to us or at all.
Finally,
the outbreak of COVID-19 may also have the effect of heightening many of the other risks described in this “Risk Factors”
section, such as those related to the market for our securities and cross-border transactions.
We
may not be able to consummate an initial business combination within 24 months after the closing of our initial public offering
(or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting
to extend such date, voting together as a single class), in which case we would cease all operations except for the purpose of
winding up and we would redeem our public shares and liquidate.
We
may not be able to find a suitable candidate for our initial business combination and complete our initial business combination
within 24 months after the closing of our initial public offering (or such later date as approved by holders of a majority
of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single class).
Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in
the capital and debt markets and the other risks described herein. For example, the outbreak of COVID-19 continues to grow both
in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments, it could
limit our ability to complete our initial business combination, including as a result of increased market volatility, decreased
market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the outbreak of
COVID-19 may negatively impact businesses we may seek to acquire. If we have not completed our initial business combination within
such time period, we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account
(net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of
then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any); 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.
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 recent coronavirus (COVID-19) outbreak.
In
December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread
throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization
declared the outbreak of the coronavirus disease (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.” A significant outbreak of COVID-19 and other infectious
diseases could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide,
and the business of any potential target business with which we consummate a business combination could be materially and adversely
affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict
travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services
providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts
our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or
treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for
an extensive period of time, our ability to consummate a business combination, or the operations of a target business with which
we ultimately consummate a business combination, may be adversely affected in a material way.
If
we seek stockholder approval of our initial business combination, our initial stockholders, directors, executive officers, advisors
and their affiliates may elect to purchase public shares or warrants, which may influence a vote on a proposed business combination
and reduce the public “float” of our shares of Class A common stock or public warrants.
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 initial stockholders, directors, executive officers, advisors or
their affiliates may purchase public shares or warrants in privately negotiated transactions or in the open market either prior
to or following the completion of our initial business combination, although they are under no obligation to do so. 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 public shares or warrants in such transactions.
In
the event that our initial stockholders, directors, executive officers, advisors or their affiliates purchase shares in privately
negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders
would be required to revoke their prior elections to redeem their shares. The purpose of any such transaction could be to (i) vote
in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination,
(ii) reduce the number of public warrants outstanding or vote such warrants on any matters submitted to the warrant holders
for approval in connection with our initial business combination or (iii) 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. Any such purchases of our securities may result in the completion
of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public
“float” of our shares of Class A common stock or public warrants may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading
of our securities on a national securities exchange. 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. See “Item 1. Business—Effecting
Our Initial Business Combination—Permitted Purchases and Other Transactions with Respect to Our Securities” for a
description of how our initial stockholders, directors, executive officers, advisors or their affiliates will select which stockholders
to purchase securities from in any private transaction.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination,
or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial
business combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy 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. In the event that a stockholder fails to comply with these procedures, its shares may not be redeemed.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore,
to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders are entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion
of an initial business combination, and then only in connection with those shares of Class A common stock that such stockholder
properly elected to redeem, subject to the limitations described herein; (ii) the redemption of any public shares properly
tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify
the substance or timing of our obligation to provide holders of our shares of Class A common stock the right to have their
shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete
our initial business combination within 24 months from the closing of our initial public offering (or such later date as
approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting
together as a single class) or (B) with respect to any other provision relating to the rights of holders of our shares of
Class A common stock; and (iii) the redemption of our public shares if we have not consummated an initial business within
24 months from the closing of our initial public offering (or such later date as approved by holders of a majority of shares
of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single class), subject to
applicable law and as further described herein. Public stockholders who redeem their shares of Class A common stock in connection
with a stockholder vote described in clause (ii) in the preceding sentence shall not be entitled to funds from the trust
account upon the subsequent completion of an initial business combination or liquidation if we have not consummated an initial
business combination within 24 months from the closing of our initial public offering (or such later date as approved by
holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together
as a single class), with respect to such shares of Class A common stock so redeemed. In no other circumstances will a public
stockholder have any right or interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds
held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your
public shares or warrants, potentially at a loss.
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
Our
SAILSM securities, Class A common stock, and warrants are currently listed on the Nasdaq. Although after giving
effect to our initial public offering we expect to continue to meet, on a pro forma basis, the minimum initial listing standards
set forth in the Nasdaq listing standards, our securities may not be, or may not continue to be, listed on the Nasdaq in the future
or prior to our initial business combination. In order to continue listing our securities on the Nasdaq prior to our initial business
combination, we must maintain certain financial, distribution and share price levels. Generally, we must maintain a minimum amount
in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 public holders).
Additionally,
our SAILSM securities will not be traded after completion of our initial business combination and, in connection
with our initial business combination, we will be required to demonstrate compliance with the Nasdaq’s initial listing requirements,
which are more rigorous than the Nasdaq’s continued listing requirements, in order to continue to maintain the listing of
our securities on the Nasdaq. For instance, our share price would generally be required to be at least $4.00 per share and our
stockholders’ equity would generally be required to be at least $5.0 million and we would be required to have a minimum
of 300 round lot holders (with at least 50% of such round lot holders holding securities with a market value of at least $2,500).
We may not able to meet those initial listing requirements at that time.
If
the Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national
securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face
significant material adverse consequences, including:
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a
limited availability of market quotations for our securities;
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•
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reduced
liquidity for our securities;
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•
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a
determination that our Class A common stock are a “penny stock” which
will require brokers trading in our Class A common stock to adhere to more stringent
rules and possibly result in a reduced level of trading activity in the secondary trading
market for our securities;
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a
limited amount of news and analyst coverage; and
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a
decreased ability to issue additional securities or obtain additional financing in the
future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because our SAILSM securities
and Class A common stock and warrants are listed on the Nasdaq, our SAILSM securities, Class A common
stock and warrants will qualify as covered securities under the statute. Although the states are preempted from regulating the
sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and,
if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular
case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank
check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and
might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states.
Further, if we were no longer listed on the Nasdaq, our securities would not qualify as covered securities under the statute,
and we would be subject to regulation in each state in which we offer our securities.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete
an initial business combination with a target business that has not been selected, we may be deemed to be a “blank check”
company under the United States securities laws. However, because we have net tangible assets in excess of $5,000,000 upon the
completion of our initial public offering and the sale of the private placement warrants and have 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 SAILSM securities were immediately tradable and we have a longer period
of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if our initial public
offering were subject to Rule 419, that rule would have prohibited the release of any interest earned on funds held in the
trust account to us unless and until the funds in the trust account were released to us in connection with our completion of an
initial business combination.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our shares of Class A common
stock, you will lose the ability to redeem all such shares in excess of 15% of our shares of Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a
public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 15% of the shares sold in our initial public offering without our prior consent,
which we refer to as the “Excess Shares.” However, we would not be restricting our stockholders’ ability to
vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the
Excess Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a
material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive
redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result, you
will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your
shares in open market transactions, potentially at a loss.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for
us to complete our initial business combination. If we have not consummated our initial business combination within the required
time period, our public stockholders may receive only approximately $10.00 per public share, or less in certain circumstances,
on the liquidation of our trust account and our warrants will expire worthless.
We
expect to encounter competition from other entities having a business objective similar to ours, including private investors (which
may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive
experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services
to various industries. Many of these competitors possess similar or greater technical, human and other resources to ours or more
local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many
of these competitors. While we believe there are numerous candidates for our initial business combination we could potentially
acquire with the net proceeds of our initial public offering and the sale of the private placement warrants, our ability to compete
with respect to the acquisition of certain candidates for our initial business combination that are sizable will be limited by
our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition
of certain candidates for our initial business combination. Furthermore, we are obligated to offer holders of our public shares
the right to redeem their shares for cash at the time of our initial business combination in conjunction with a stockholder vote
or via a tender offer. Candidates for our initial business combination will be aware that this may reduce the resources available
to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully
negotiating an initial business combination. If we do not complete our initial business combination, our public stockholders may
receive only their pro rata portion of the funds in the trust account that are available for distribution to public stockholders,
and our warrants will expire worthless.
If
the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account
are insufficient to allow us to operate for the 24 months following the closing of our initial public offering (or such later
date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such
date, voting together as a single class), it could limit the amount available to fund our search for a target business or businesses
and our ability to complete our initial business combination, and we will depend on loans from our sponsor, its affiliates or
members of our management team to fund our search and to complete our initial business combination.
As
of December 31, 2020, we had approximately $4,600,000 in cash held outside the trust account to fund our working capital requirements.
We believe that, upon the closing of our initial public offering, the funds available to us outside of the trust account, together
with funds available from loans from our sponsor, its affiliates or members of our management team will be sufficient to allow
us to operate for 24 months from the closing of our initial public offering or such later date as approved by holders of
a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single
class); however, we cannot assure you that our estimate is accurate, and our sponsor, its affiliates or members of our management
team are under no obligation to advance funds to us in such circumstances. Of the funds available to us, we expect to 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 or investors on terms more
favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current
intention to do so. If we entered into a letter of intent 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 required to seek additional capital, we would need to borrow funds from our sponsor, its affiliates, members of our management
team or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our management team nor
their affiliates is under any obligation to us in such circumstances. Any such advances may be repaid only from funds held outside
the trust account or from funds released to us upon completion of our initial business combination. Up to $1,500,000 of such loans
may be convertible into warrants of the post-business combination entity at a price of $1.50 per warrant at the option of the
lender. The warrants would be identical to the private placement warrants. Prior to the completion of our initial business combination,
we do not expect to seek loans from parties other than our sponsor, its affiliates or members of our management team 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 have not consummated our initial business combination within the required time period 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 an estimated $10.00 per public share, or possibly less, on our redemption of our public
shares, and our warrants will expire worthless.
Subsequent
to completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment
or other charges that could have a significant negative effect on our financial condition, results of operations and the price
of our securities, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
identify all material issues with a particular target business, that it would be possible to uncover all material issues through
a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later
arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or
incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies
certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary
risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that
we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges
of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing
debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any holders who choose
to retain their securities following the business combination could suffer a reduction in the value of their securities. Such
holders are unlikely to have a remedy for such reduction in value.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per public share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to
have all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements, they may not
be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary
responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order
to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third-party
refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an agreement with a third-party that has not executed a waiver if
management believes that such third-party’s engagement would be significantly more beneficial to us than any alternative.
Examples
of possible instances where we may engage a third-party that refuses to execute a waiver include the engagement of a third-party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Upon redemption of our public shares, if we have not consummated an initial business combination within 24 months
from the closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding
common stock that are voted at a meeting to extend such date, voting together as a single class), or upon the exercise of a redemption
right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that
were not waived that may be brought against us within the ten years following redemption. Accordingly, the per-share redemption
amount received by public stockholders could be less than the $10.00 per public share initially held in the trust account, due
to claims of such creditors. Pursuant to a letter agreement, our sponsor has agreed that it will be liable to us if and to the
extent any claims by a third-party (other than our independent auditors) for services rendered or products sold to us, or a prospective
target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to
below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account
as of the date of the liquidation of the trust account if less than $10.00 per public share due to reductions in the value of
the trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations; provided that such
liability will not apply to any claims by a third-party or prospective target business that executed a waiver of any and all rights
to seek access to the trust account nor will it apply to any claims under our indemnity of the underwriters of our initial public
offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed
waiver is deemed to be unenforceable against a third-party, our sponsor will not be responsible to the extent of any liability
for such third-party claims.
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 we believe that our sponsor’s only assets are securities
of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. As a result, if any
such claims were successfully made against the trust account, the funds available for our initial business combination and redemptions
could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business combination,
and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers
or directors will indemnify us for claims by third parties, including, without limitation, claims by vendors and prospective target
businesses.
Our
directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of
funds in the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per public share and (ii) the
actual amount per public share held in the trust account as of the date of the liquidation of the trust account if less than
$10.00 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn
to pay our tax obligations, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification
obligations related to a particular claim, our independent directors would determine whether to take legal action against our
sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal
action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular
instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust
account available for distribution to our public stockholders may be reduced below $10.00 per public share.
We
may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We
have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors
have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek
recourse against the trust account for any reason whatsoever (except to the extent they are entitled to funds from the trust account
due to their ownership of public shares). Accordingly, any indemnification provided will be able to be satisfied by us only if
(i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our
obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or
directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative
litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage
awards against our officers and directors pursuant to these indemnification provisions.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members
of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members
of our board of directors and us to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board
of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing
itself and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims
of creditors.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over
the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities, each of which may make it difficult for us to complete
our initial business combination.
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In
addition, we may have imposed upon us burdensome requirements, including:
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registration
as an investment company with the SEC;
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adoption
of a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations
that we are currently not subject to.
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In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our
activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting
more than 40% of our assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business
will be to identify and complete a business combination and thereafter to operate the post-transaction business or assets for
the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to
buy unrelated businesses or assets or to be a passive investor.
We
do not believe that our 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. An investment in our securities is
not intended for persons who are seeking a return on investments in government securities or investment securities. The trust
account is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our initial
business combination; (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to
amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to provide
holders of our shares of Class A common stock the right to have their shares redeemed in connection with our initial business
combination or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months
from the closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding
common stock that are voted at a meeting to extend such date, voting together as a single class) or (B) with respect to any
other provision relating to the rights of holders of our shares of Class A common stock; or (iii) absent our completing
an initial business combination within 24 months from the closing of our initial public offering (or such later date as approved
by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together
as a single class), our return of the funds held in the trust account to our public stockholders as part of our redemption of
the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company
Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would
require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination.
If we have not consummated our initial business combination within the required time period, our public stockholders may receive
only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust account and our
warrants will expire worthless.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our
ability to negotiate and complete our initial business combination, and results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply
with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult,
time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time
and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a
failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our
business, including our ability to negotiate and complete our initial business combination, and results of operations.
If
we have not consummated an initial business combination within 24 months from the closing of our initial public offering
(or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting
to extend such date, voting together as a single class), our public stockholders may be forced to wait beyond such period before
redemption from our trust account.
If
we have not consummated an initial business combination within 24 months from the closing of our initial public offering
(or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting
to extend such date, voting together as a single class), the proceeds then on deposit in the trust account, including interest
earned on the funds held in the trust account and not previously released to us to pay our taxes, if any (less up to $100,000
of interest to pay dissolution expenses), will be used to fund the redemption of our public shares, as further described herein.
Any redemption of public stockholders from the trust account will be effected automatically by function of our amended and restated
certificate of incorporation prior to any voluntary winding up. If we are required to wind up, 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 the Delaware General Corporation Law (“DGCL”).
In that case, investors may be forced to wait beyond 24 months from the closing of our initial public offering (or such later
date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such
date, voting together as a single class) 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. We have no obligation to return funds
to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our initial business combination
or amend certain provisions of our amended and restated certificate of incorporation, and only then in cases where investors have
sought to redeem their shares of Class A common stock. Only upon our redemption or any liquidation will public stockholders
be entitled to distributions if we do not complete our initial business combination and do not amend certain provisions of our
amended and restated certificate of incorporation. Our amended and restated certificate of incorporation will provide that, if
we wind up for any other reason prior to the consummation of our initial business combination, we will follow the foregoing procedures
with respect to the liquidation of the trust account as promptly as reasonably possible but not more than ten business days thereafter.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
If
we are forced to enter into an insolvent liquidation, any distributions received by stockholders could be viewed as an unlawful
payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts
as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received
by our stockholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors
and/or may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public stockholders from
the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us
for these reasons.
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.
If
the issuance of the shares of Class A common stock upon exercise of the warrants is not registered, qualified or exempt from
registration or qualification under the Securities Act and applicable state securities laws, holders of warrants will not be entitled
to exercise such warrants and such warrants may have no value and expire worthless. In such event, holders who acquired their
warrants as part of a purchase of SAILSM securities will have paid the full SAILSM securities
purchase price solely for the shares of Class A common stock included in the SAILSM securities.
We
are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or
any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed that, as soon as practicable,
but in no event later than 15 business days, after the closing of our initial business combination, we will use our best efforts
to file with the SEC a registration statement covering the registration under the Securities Act of the shares of Class A
common stock issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same to become effective
within 60 business days following our initial business combination and to maintain a current prospectus relating to the shares
of Class A common stock issuable upon exercise of the warrants until the expiration of the warrants in accordance with the
provisions of the warrant agreement.
We
cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change
in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by
reference therein are not current or correct or the SEC issues a stop order.
If
the shares of Class A common stock issuable upon exercise of the warrants are not registered under the Securities Act, under
the terms of the warrant agreement, holders of warrants who seek to exercise their warrants will not be permitted to do so for
cash and, instead, will be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act
or another exemption.
In
no event will warrants be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders
seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the
securities laws of the state of the exercising holder, or an exemption from registration or qualification is available.
If
our shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange
such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act, we
may, at our option, not permit holders of warrants who seek to exercise their warrants to do so for cash and, instead, require
them to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we
will not be required to file or maintain in effect a registration statement or register or qualify the shares underlying the warrants
under applicable state securities laws, and in the event we do not so elect, we will use our best efforts to register or qualify
the shares underlying the warrants under applicable state securities laws to the extent an exemption is not available.
In
no event will we be required to net cash settle any warrant, or issue securities (other than upon a cashless exercise as described
above) or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying
the warrants under the Securities Act or applicable state securities laws.
You
may only be able to exercise your public warrants on a “cashless basis” under certain circumstances, and if you do
so, you will receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for
cash.
The
warrant agreement provides that in the following circumstances holders of warrants who seek to exercise their warrants will not
be permitted to do so for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9)
of the Securities Act: (i) if the shares of Class A common stock issuable upon exercise of the warrants are not registered
under the Securities Act in accordance with the terms of the warrant agreement; (ii) if we have so elected and the shares
of Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that
they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act; and (iii) if
we have so elected and we call the public warrants for redemption. If you exercise your public warrants on a cashless basis, you
would pay the warrant exercise price by surrendering the warrants for that number of shares of Class A common stock equal
to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the
warrants, multiplied by the excess of the “fair market value” of our shares of Class A common stock
(as defined in the next sentence) over the exercise price of the warrants by (y) the fair market value. The “fair market
value” is the average reported closing price of the shares of Class A common stock for the 10 trading days ending on
the third trading day prior to the date on which the notice of exercise is received by the warrant agent or on which the notice
of redemption is sent to the holders of warrants, as applicable. As a result, you would receive fewer shares of Class A common
stock from such exercise than if you were to exercise such warrants for cash.
The
grant of registration rights to our initial stockholders and holders of our private placement warrants may make it more difficult
to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of
our shares of Class A common stock.
Pursuant
to agreement registration and shareholder rights agreement, our initial stockholders and their permitted transferees can demand
that we register the alignment shares and the Class A common stock into which such alignment shares are convertible, holders
of our private placement warrants and their permitted transferees can demand that we register the shares of Class A common
stock and the warrants (and the shares of Class A common stock issuable upon exercise of such warrants) underlying such private
placement warrants, and holders of private placement warrants that may be issued upon conversion of working capital loans may
demand that we register the shares of Class A common stock and the shares of Class A common stock issuable upon exercise
of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant
number of securities for trading in the public market may have an adverse effect on the market price of our Class A common
stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult
to conclude. This is because the stockholders of the candidate for our initial business combination 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 Class A common stock that is expected when the shares of common stock owned by our initial stockholders, holders of our
private placement warrants, holders of our working capital loans or their respective permitted transferees are registered.
Because
we are neither limited to evaluating a target business in a particular industry sector 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.
Our
efforts to identify a prospective initial business combination candidate are not be limited to a particular industry, sector or
geographic region. While we may pursue an initial business combination opportunity in any industry or sector, we intend to capitalize
on the ability of our management team to identify, acquire and operate a business or businesses that can benefit from our management
team’s established global relationships and operating experience. Our management team has extensive experience in identifying
and executing strategic investments globally and has done so successfully in a number of sectors, including financial services.
Our amended and restated certificate of incorporation prohibits us from effectuating an initial business combination solely with
another blank check company or similar company with nominal operations. Because we have not yet selected any specific candidate
for our initial business combination with respect to an initial business combination, there is no basis to evaluate the possible
merits or risks of any particular candidate for our initial business combination’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 candidate for our initial business combination, 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 candidate for our initial business combination. We also cannot assure you that an investment in our securities
will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a candidate
for our initial business combination. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant
holders following the 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 unless they are able to successfully claim that the
reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they
are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as
applicable, relating to the initial business combination contained an actionable material misstatement or material omission.
We
may seek acquisition opportunities in industries or sectors which may or may not be outside of our management’s area of
expertise.
We
will consider a business combination outside of our management’s area of expertise if a business combination target is presented
to us and we determine that such candidate offers an attractive acquisition opportunity for our company. Although our management
will endeavor to evaluate the risks inherent in any particular business combination target, we cannot assure you that we will
adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our securities
will not ultimately prove to be less favorable to investors than a direct investment, if an opportunity were available, in a business
combination target. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our
management’s expertise may not be directly applicable to its evaluation or operation, and the information contained in this
Report regarding the areas of our management’s expertise would not be relevant to an understanding of the business that
we elect to acquire. As a result, our management may not be able to adequately ascertain or assess all of the significant risk
factors. Accordingly, any holders who choose to retain their securities following the business combination could suffer a reduction
in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective candidates for our initial business combination,
it is possible that a candidate for our initial business combination with which we enter into our initial business combination
will not have all of these positive attributes. If we complete our initial business combination with a candidate for our initial
business combination 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 initial business
combination with a candidate for our initial business combination 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 candidate for our initial business combination that requires us to have a minimum net worth or a certain amount of cash.
In addition, if stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business
or other legal reasons, it may be more difficult for us to attain stockholder approval of our initial business combination if
the candidate for our initial business combination does not meet our general criteria and guidelines. If we do not complete our
initial business combination, our public stockholders may only receive their pro rata portion of the funds in the trust account
that are available for distribution to public stockholders, and our warrants will expire worthless.
We
are not required to obtain an opinion from an independent accounting or investment banking firm, and consequently, you may have
no assurance from an independent source that the price we are paying for the business is fair to our stockholders from a financial
point of view.
Unless
we complete our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent
accounting firm or independent investment banking firm that is a member of FINRA that the price we are paying is fair to our stockholders
from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors,
who will determine fair market value based on standards generally accepted by the financial community. Such standards used will
be disclosed in our proxy solicitation or tender offer materials, as applicable, related to our initial business combination.
We
may issue additional shares of Class A common stock or preferred stock to complete our initial business combination or under
an employee incentive plan after completion of our initial business combination. 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 700,000,000 shares of Class A common stock,
20,000,000 shares of Class B common stock and 10,000,000 shares of preferred stock, par value $0.0001 per share. There are
52,500,000 shares of Class A common stock issued and outstanding and 2,625,000 shares of Class B common stock issued
and outstanding. One tenth of the total outstanding alignment shares will convert into shares of our Class A common stock in each
of the ten fiscal years following our initial business combination based on the Total Return on our outstanding equity capital
as of the relevant measurement date above the Price Threshold. There are no shares of preferred stock issued and outstanding.
We
may issue a substantial number of additional shares of Class A common stock or shares of preferred stock to complete our
initial business combination or under an employee incentive plan after completion of our initial business combination. We may
also issue shares of Class A common stock upon conversion of our Class B common stock from time to time after our initial
business combination as a result of the conversion features of the alignment shares contained in our amended and restated certificate
of incorporation. In addition, we may also issue shares of Class A common stock to redeem the warrants at a ratio greater
than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions as set forth therein.
However, our amended and restated certificate of incorporation provides, among other things, that prior to our initial business
combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the trust
account; or (ii) vote as a class with our public shares (a) on any initial business combination or (b) to approve
an amendment to our amended and restated certificate of incorporation to (x) extend the time we have to consummate an initial
business combination beyond 24 months from the closing of our initial public offering or (y) amend the foregoing provisions.
These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate
of incorporation, may be amended with a stockholder vote. The issuance of additional shares of common stock or shares of preferred
stock:
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may
significantly dilute the equity interest of investors (which dilutive effect would increase
as the price of our Class A common stock increases on a year-over-year basis, in
respect of shares issued upon conversion of the alignment shares);
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may
subordinate the rights of holders of shares of Class A common stock if shares of
preferred stock are issued with rights senior to those afforded shares of our Class A
common stock;
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could
cause a change in control if a substantial number of shares of Class A common stock
is issued, which may affect, among other things, our ability to use our net operating
loss carry forwards, if any, and could result in the resignation or removal of our present
officers and directors; and
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may
adversely affect prevailing market prices for our SAILSM securities,
shares of Class A common stock and/or warrants.
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Subsequent
to the completion of our initial business combination, our alignment shares will be eligible for conversion into shares of our
Class A common stock based on the Total Return of our outstanding equity capital. Any such issuance would dilute the interest
of our stockholders and likely present other risks.
Our
initial stockholders hold 2,587,500 shares of our Class B common stock that will automatically convert into shares of our Class
A common stock from time to time after our initial business combination as a result of the conversion feature of the alignment
shares contained in our amended and restated certificate of incorporation. One tenth of the total number of outstanding alignment
shares will convert into shares of our Class A common stock for each of the ten fiscal years following our initial business combination
based on the Total Return on our outstanding equity capital as of the relevant measurement date above the Price Threshold.
As
a result of such conversion feature, we may issue a substantial number of additional shares of our Class A common stock to our
initial stockholders, as the alignment shares are not subject to a conversion limitation in the event of increases in the VWAP
of our Class A common stock. The issuance of additional shares of our Class A common stock upon the conversion of Class B common
stock may significantly dilute the equity interest of investors in our initial public offering, may adversely affect prevailing
market prices for our Class A common stock, warrants or other outstanding equity securities and will not result in adjustment
to the exercise price of our warrants.
Resources
could be wasted in researching initial business combinations that are not completed, which could materially adversely affect subsequent
attempts to locate and acquire or merge with another business. If we do not complete our initial business combination, our public
stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution
to public stockholders, and our warrants will expire worthless.
We
anticipate that the investigation of each specific candidate for our initial business combination 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 initial business
combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if
we reach an agreement relating to a specific candidate for our initial business combination, we may fail to complete our initial
business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us
of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with
another business. If we do not complete our initial business combination, our public stockholders may only receive their pro rata
portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire
worthless.
We
are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors.
We believe that our success depends on the continued service of our officers and directors, at least until we have completed our
initial business combination. In addition, our executive officers and directors are not required to commit any specified amount
of time to our affairs and, accordingly, will have conflicts of interest in allocating their time among various business activities,
including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement
with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of
one or more of our directors or executive officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon
the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel
could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of
our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain
with the target business in senior management, director or advisory positions following our initial business combination, it is
likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any
individuals we engage after our initial business combination, we cannot assure you that our assessment of these individuals will
prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which
could cause us to have to expend time and resources helping them become familiar with such requirements.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination, and a particular business combination may be conditioned on the retention or resignation of such key personnel. These
agreements may provide for them to receive compensation following our initial business combination and, as a result, may cause
them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with our company after the completion of our initial business combination only if they are
able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take
place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination.
Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal
and financial interests of such individuals may influence their motivation in identifying and selecting a target business. In
addition, pursuant to an agreement to be entered into on or prior to the closing of our initial public offering, our sponsor,
upon and following consummation of an initial business combination, will be entitled to nominate three individuals for election
to our board of directors, as long as the sponsor holds any securities covered by the registration and stockholder rights agreement.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company.
Our
key personnel may be able to remain with our company after the completion of our initial business combination only if they are
able to negotiate employment or consulting agreements in connection with the initial business combination. Such negotiations would
take place simultaneously with the negotiation of the initial business combination and could provide for such individuals to receive
compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the
initial business combination. Such negotiations also could make such key personnel’s retention or resignation a condition
to any such agreement. The personal and financial interests of such individuals may influence their motivation in identifying
and selecting a candidate for our initial business combination, subject to their fiduciary duties under Delaware law.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of
a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination
business.
The
role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an
acquisition candidate will not wish to remain in place.
Our
executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete
our initial business combination.
Our
executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in
a conflict of interest in allocating their time between our operations and our search for a business combination and their other
businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each
of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation,
and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent
directors also serve as officers and board members for other entities. If our executive officers’ and directors’ other
business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels,
it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial
business combination.
Our
officers and directors presently have, and any of them in the future may have, additional, fiduciary or contractual obligations
to other entities, including another blank check company, and, accordingly, may have conflicts of interest in determining to which
entity a particular business opportunity should be presented.
Until
we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more
businesses or entities. 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, subject to his or her fiduciary duties under the DGCL. In particular, many of our officers
and directors are affiliated with General Catalyst, our sponsor and other companies, including Livongo and Health Catalyst, that
may be interested in investing in or acquiring in similar business targets as the company. Accordingly, they may have conflicts
of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved
in our favor and a potential target business may be presented to another entity prior to its presentation to us, subject to their
fiduciary duties under the DGCL.
In
addition, our independent directors may in the future become affiliated with other blank check companies that may have acquisition
objectives that are similar to ours. 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 such other blank check companies prior to its presentation to us, subject to our officers’ and directors’
fiduciary duties under the DGCL. Our amended and restated certificate of incorporation will provide that we renounce our interest
in any business combination opportunity offered to any director or officer unless such opportunity is expressly offered to such
person solely in his or her capacity as a director or officer of the company and it is an opportunity that we are able to complete
on a reasonable basis.
Other
entities that our officers and directors are associated with, and in particular General Catalyst, our sponsor, Livongo and Health
Catalyst, may compete with us for acquisition opportunities and if pursued by them we may be precluded from such opportunities.
Investment ideas generated within General Catalyst, our sponsor, Livongo and Health Catalyst may be suitable for both us and such
entities and/or current or future investment vehicles associated with our officers and directors, and such ideas may be directed
to such entities rather than to us. Such opportunities may outperform any businesses we acquire. Neither such entities nor members
of our management team and board of directors who are also employed by such entities have any obligation to present us with any
opportunity for a potential business combination of which they become aware, unless presented to such person solely in his or
her capacity as an officer or director of the company. The sponsor and/or our officers and directors, in their capacities as employees
or other entities or in their other endeavors, may be required to present potential business to other entities, before they present
such opportunities to us.
Involvement
of members of our management and companies with which they are affiliated in civil disputes and litigation, governmental investigations
or negative publicity unrelated to our business affairs could materially impact our ability to consummate an initial business
combination.
Members
of our management team and companies with which they are affiliated have been, and in the future will continue to be, involved
in a wide variety of business affairs, including transactions, such as sales and purchases of businesses, and ongoing operations.
As a result of such involvement, members of our management and companies with which they are affiliated in have been, and may
in the future be, involved in civil disputes, litigation, governmental investigations and negative publicity relating to their
business affairs. Any such claims, investigations, lawsuits or negative publicity may be detrimental to our reputation and could
negatively affect our ability to identify and complete an initial business combination in a material manner and may have an adverse
effect on the price of our securities.
Our
executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that
conflict with our interests.
We
have not adopted a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having
a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction
to which we are a party or have an interest. In fact, we may enter into a business combination with a target business that is
affiliated with our sponsor, our directors or executive officers, although we do not intend to do so. Nor do we have a policy
that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by
us. Accordingly, such persons or entities may have a conflict between their interests and ours.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our sponsor, executive officers, directors or initial stockholders which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, executive officers and directors with other entities, we may decide to acquire one or
more businesses affiliated with our sponsor, executive officers, directors or initial stockholders. Such entities may compete
with us for business combination opportunities. Our sponsor, officers and directors are not currently aware of any specific opportunities
for us to complete our initial business combination with any entities with which they are affiliated, and there have been no substantive
discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing
on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such
affiliated entity met our criteria and guidelines 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 that is a member of FINRA or 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 sponsor, executive
officers, directors or initial stockholders, potential conflicts of interest still may exist and, as a result, the terms of the
business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since
our initial stockholders will lose their entire investment in us if our initial business combination is not completed (other than
with respect to public shares they may acquire after our initial public offering), a conflict of interest may arise in determining
whether a particular business combination target is appropriate for our initial business combination.
On
September 24, 2020, an affiliate of our sponsor paid $22,500, or approximately $0.009 per share, and the foundation paid
$2,500, or approximately $0.009 per share, in consideration of 2,587,500 and 287,500 Class B shares, respectively. Such Class B
shares held by an affiliate of our sponsor were subsequently transferred to our sponsor. Up to 375,000 of the Alignment Shares
were to be forfeited depending on the extent to which the underwriters’ over-allotment was exercised. The Alignment Shares
are entitled to (together with the shares of Class B common stock) a number of votes representing 20% of the Company’s outstanding
common stock prior to the completion of the Initial Business Combination. The underwriters exercised the over-allotment option
in part and the Company consummated the sale of such SAILSM Securities on November 17, 2020; thus, 125,000 Alignment Shares were
no longer subject to forfeiture. In November 2020, our sponsor transferred 6,469 alignment shares to each of our independent
directors resulting in our sponsor holding 2,561,624 alignment shares. Prior to the initial investment in the company of $25,000
by our initial stockholders for the alignment shares, the company had no assets, tangible or intangible. The per share price of
the alignment shares was determined by dividing the amount contributed to the company by the number of alignment shares issued.
The alignment shares will be worthless if we do not complete an initial business combination. In addition, our sponsor and certain
directors of the Company purchased an aggregate of 11,666,666 private placement warrants, each exercisable to purchase one share
of Class A common stock at $11.50 per share, subject to adjustment, at a price of $1.50 per warrant ($17,500,000 in the aggregate)
in a private placement that closed simultaneously with the closing of our initial public offering. If we do not consummate an
initial business within 24 months from the closing of our initial public offering (or such later date as approved by holders
of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a
single class), the private placement warrants will expire worthless. The personal and financial interests of our executive officers
and directors may influence their motivation in identifying and selecting a target business combination, completing an initial
business combination and influencing the operation of the business following the initial business combination. This risk may become
more acute as the 24-month anniversary of the closing of our initial public offering (or such later date as approved by holders
of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a
single class) nears, which is the deadline for our consummation of an initial business combination.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments as of the date of this report to issue any notes or other debt securities, or to otherwise incur outstanding
debt following our initial public offering, we may choose to incur substantial debt to complete our initial business combination.
We and our officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any
right, title, interest or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect
the per-share amount available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety
of negative effects, including:
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default
and foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest
payments when due if we breach certain covenants that require the maintenance of certain
financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt is payable
on demand;
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our
inability to obtain necessary additional financing if the debt contains covenants restricting
our ability to obtain such financing while the debt is outstanding;
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our
inability to pay dividends on our shares of Class A common stock;
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which
will reduce the funds available for dividends on our shares of Class A common stock
if declared, expenses, capital expenditures, acquisitions and other general corporate
purposes;
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limitations
on our flexibility in planning for and reacting to changes in our business and in the
industry in which we operate;
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation; and
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, execution of our strategy and other purposes and other disadvantages
compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of our initial public offering and the sale of
the private placement warrants, which will cause us to be solely dependent on a single business which may have a limited number
of products or services. This lack of diversification may negatively impact our operations and profitability.
The
net proceeds from our offering and the sale of the private placement warrants provided us with $513,625,000 that we may use to
complete our initial business combination (after taking into account the $18,375,000 of deferred underwriting commissions being
held in the trust account and the estimated expenses of our initial public offering).
We
may effectuate our initial business combination with a single-target business or multiple-target businesses simultaneously or
within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target
business because of various factors, including the existence of complex accounting issues and the requirement that we prepare
and file pro forma financial statements with the SEC that present operating results and the financial condition of several
target businesses as if they had been operated on a combined basis. By completing our initial business combination with only a
single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further,
we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike
other entities which may have the resources to complete several business combinations in different industries or different areas
of a single industry. Accordingly, the prospects for our success may be:
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solely
dependent upon the performance of a single business, property or asset; or
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dependent
upon the development or market acceptance of a single or limited number of products,
processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations
and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the
operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address
these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. Very
little public information generally exists about private companies, and we could be required to make our decision on whether to
pursue a potential initial business combination on the basis of limited information, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
Our
management may not be able to maintain control of a target business after our initial business combination. Upon the loss of control
of a target business, new management may not possess the skills, qualifications or abilities necessary to profitably operate such
business.
We
may structure our initial business combination so that the post-business combination 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-business combination company owns or acquires 50% or more of the outstanding voting securities of the
target or otherwise acquires a controlling interest in the target business 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-business combination 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 Class A common stock in exchange for all of the outstanding capital stock of
a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial
number of new shares of Class A common stock, our stockholders immediately prior to such transaction could own less than
a majority of our outstanding shares of Class A common stock subsequent to such transaction. In addition, other minority
stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s
shares than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain
control of the target business.
We
may seek business combination opportunities with a high degree of complexity that require significant operational improvements,
which could delay or prevent us from achieving our desired results.
We
may seek business combination opportunities with large, highly complex companies that we believe would benefit from operational
improvements. While we intend to implement such improvements, to the extent that our efforts are delayed or we are unable to achieve
the desired improvements, the business combination may not be as successful as we anticipate.
To
the extent we complete our initial business combination with a large complex business or entity with a complex operating structure,
we may also be affected by numerous risks inherent in the operations of the business with which we combine, which could delay
or prevent us from implementing our strategy. Although our management team will endeavor to evaluate the risks inherent in a particular
target business and its operations, we may not be able to properly ascertain or assess all of the significant risk factors until
we complete our business combination. If we are not able to achieve our desired operational improvements, or the improvements
take longer to implement than anticipated, we may not achieve the gains that we anticipate. Furthermore, some of these risks and
complexities may be outside of our control and leave us with no ability to control or reduce the chances that those risks and
complexities will adversely impact a target business. Such combination may not be as successful as a combination with a smaller,
less complex organization.
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 does not provide a specified maximum redemption threshold, except that in no
event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that
we do not then 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 initial stockholders, officers, directors, advisors or their affiliates. In the event the
aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted
for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed 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 Class A common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an
alternate business combination.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions
of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek
to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for
us to complete our initial business combination that our stockholders may not support.
In
order to effectuate a business combination, special purpose acquisition companies have, in the recent past, amended various provisions
of their charters and governing instruments, including their warrant agreements. For example, special purpose acquisition companies
have amended the definition of business combination, increased redemption thresholds and extended the time to consummate a 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 51% of our common stock, and amending our warrant agreement will require a vote of holders of at least 50% of the public warrants
that vote on such amendment and, solely with respect to any amendment to the terms of the private placement SAILSM securities
or any provision of the warrant agreement with respect to the private placement SAILSM securities, 50% of the
number of the then outstanding private placement SAILSM securities. In addition, our amended and restated certificate
of incorporation requires us to provide our public stockholders with the opportunity to redeem their public shares for cash if
we propose an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete a business combination within 24 months of the closing of our initial
public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted
at a meeting to extend such date, voting together as a single class) or with respect to any other material provisions relating
to stockholders’ rights or business combination transaction activity. To the extent any of such amendments would be deemed
to fundamentally change the nature of the securities offered, we would register, or seek an exemption from registration for, the
affected securities. We may seek to amend our charter or governing instruments or extend the time to consummate a business combination
in order to effectuate our business combination.
The
provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and
corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the approval
of holders of at least 65% of our 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 to facilitate the completion
of an initial business combination that some of our stockholders may not support.
Some
other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including
those which relate to a company’s pre-business combination activity, without approval by a certain percentage of the
company’s stockholders. In those companies, amendment of these provisions typically requires approval by 90% of the company’s
stockholders attending and voting at an annual meeting. Our amended and restated certificate of incorporation provides that any
of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of our initial public
offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances,
and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 65% of our
common stock entitled to vote thereon and corresponding provisions of the trust agreement governing the release of funds from
our trust account may be amended if approved by holders of 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 shares
of common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our
initial stockholders and their permitted transferees, if any, who will collectively beneficially own 20% of the voting power of
our common stock immediately following the completion of our initial public offering, 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-business combination behavior more easily than some other blank check companies, and this may increase our ability to
complete a business combination with which you do not agree. Our stockholders may pursue remedies against us for any breach of
our amended and restated certificate of incorporation.
Our
initial stockholders, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not
propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our
obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we
do not complete an initial business combination within 24 months from the closing of our initial public offering (or such
later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend
such date, voting together as a single class), unless we provide our public stockholders with the opportunity to redeem their
Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released
to us to pay our taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of
then outstanding public shares. These agreements are contained in letter agreements that we have entered into with our initial
stockholders, directors and each member of our management team. 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 initial stockholders, executive
officers or directors for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to
pursue a stockholder derivative action, subject to applicable law.
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. If we do not complete
our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the trust
account that are available for distribution to public stockholders, and our warrants will expire worthless.
Although
we believe that the net proceeds of our initial public offering and the sale of the private placement warrants will be sufficient
to allow us to complete our initial business combination, because we have not yet negotiated the acquisition of a target business
we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of our initial public offering
and the sale of the private placement warrants prove to be insufficient, either because of the size of our initial 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 initial business combination or the terms of negotiated
transactions to purchase shares in connection with our initial 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. The current economic environment has made it especially difficult for companies to obtain acquisition financing. To
the extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would
be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target
business candidate. If we have not consummated our initial business combination within the required time period, our public stockholders
may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust account
and our warrants will expire worthless. In addition, even if we do not need additional financing to complete our initial business
combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional
financing could have a material adverse effect on the continued development or growth of the target business. None of our officers,
directors or stockholders is required to provide any financing to us in connection with or after our initial business combination.
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.
Upon
closing of our initial public offering, our initial stockholders, with their alignment shares, owns approximately 20% of the voting
power of our common stock prior to the completion of an initial business combination. In addition, the alignment shares, all of
which are held by our initial stockholders, will entitle the holders to elect all of our directors prior to our initial business
combination. Following the completion of our initial business combination, the alignment shares will be entitled to one vote per
share. 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. Further, pursuant to a letter
agreement with our sponsor, we have agreed not to enter into a definitive agreement regarding an initial business combination
without the prior written consent of our sponsor. As a result, we may not be permitted to enter into an initial business combination
that our Board believes to be in the stockholders’ best interests. Further, for so long as any alignment shares remain outstanding,
we may not, without the prior or written consent of the holders of a majority of the alignment shares then outstanding, voting
separately as a single class, (i) amend, alter or repeal any provision of our amended and restated certificate of incorporation,
whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences
or relative, participating, optional or other or special rights of our Class B Shares, (ii) change our fiscal year, (iii)
increase the number of directors on the Board, (iv) pay any dividends or effect any split on any of our capital stock or make
any distributions of cash, securities or any other property, (v) adopt any stockholder rights plan, (vi) acquire any entity
or business with assets at a purchase price greater than 10% or more of our total assets measured in accordance with generally
accepted accounting principles in the United States or the accounting standards then used by us in the preparation of our financial
statements, (vii) issue any shares of Class A common stock in excess of 5% of our Class A common stock outstanding at the closing
of our initial public offering or that would otherwise require a stockholder vote pursuant to the rules of the stock exchange
on which the Class A shares are then listed, (viii) make a rights offering to all or substantially all holders of any class
of our common stock or (ix) issue additional Class B shares. As a result, the holders of the alignment shares may be
able to prevent us from taking such actions that the Board believes is in our interest.
If
our initial stockholders purchase any securities or if our initial stockholders purchase any additional shares of Class A
common stock in the aftermarket or in privately negotiated transactions, this would increase their control. Neither our initial
stockholders nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities.
Factors that would be considered in making such additional purchases would include consideration of the current trading price
of our shares of Class A common stock. In addition, our board of directors, whose members were elected by our sponsor, is
and will be divided into three classes, each of which will generally serve for a terms for three years with only one class
of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the
completion of our initial business combination, in which case all of the current directors will continue in office until at least
the completion of the initial business combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because
of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will
continue to exert control at least until the completion of our initial business combination.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants. As a result, the exercise price
of your warrants could be increased, the exercise period could be shortened and the number of shares of Class A common stock
purchasable upon exercise of a warrant could be decreased, all without your approval.
Our
warrants be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as
warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any
holder to cure any ambiguity or to correct any defective provision but requires the approval by the holders of at least 50% of
the then-outstanding public warrants is required to make any change that adversely affects the interests of the registered holders
of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder provided 50% of
the holders of the then outstanding public warrants that vote on such amendment approve of such amendment, after at least 10 days’
notice that an amendment is being sought. Although our ability to amend the terms of the public warrants with the consent of at
least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other
things, increase the exercise price of the warrants, convert the warrants into cash or stock (at a ratio different than initially
provided), shorten the exercise period or decrease the number of shares of Class A common stock purchasable upon exercise
of a warrant.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants
worthless.
We
have the ability to redeem the outstanding public warrants at any time after they become exercisable and prior to their expiration,
at a price of $0.01 per warrant, provided that the closing price of our shares of Class A common stock equals or exceeds
$18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant
as described under the heading “Description of Securities—Warrants—Public Stockholders’ Warrants—Anti-Dilution
Adjustments”) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice
of such redemption and provided that certain other conditions are met. If and when the warrants become redeemable by
us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under
all applicable state securities laws. As a result, we may redeem the 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 (i) exercise your warrants and pay
the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current
market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time
the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants.
In
addition, we have the ability to redeem the outstanding public warrants at any time after they become exercisable and prior to
their expiration, at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that
certain other conditions are met. Any such redemption may have similar consequences to a
cash redemption described above. In addition, such redemption may occur at a time when the warrants are “out-of-the-money,” in
which case you would lose any potential embedded value from a subsequent increase in the value of the Class A common
stock had your warrants remained outstanding.
Our
warrants may have an adverse effect on the market price of our shares of Class A common stock and make it more difficult
to effectuate our initial business combination.
Simultaneously
with the closing of our initial public offering, we issued in a private placement an aggregate of 11,666,666 private placement
warrants, including 333,333 Private Placement Warrants as a result of the underwriters’ exercise in part of their over-allotment
option, each whole private placement warrant exercisable to purchase one share of Class A common stock at $11.50 per share.
In addition, if our sponsor or an affiliate of our sponsor or certain of our officers and directors makes any working capital
loans, such lender may convert those loans into up to an additional 1,000,000 private placement warrants, at the price of $1.50
per private placement warrant. To the extent we issue common stock to effectuate a business transaction, the potential for the
issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants could make
us a less attractive acquisition vehicle to a candidate for our initial business combination. Such warrants, when exercised, will
increase the number of issued and outstanding shares of Class A common stock and reduce the value of the shares of Class A
common stock issued to complete the business transaction. Therefore, our warrants may make it more difficult to effectuate a business
transaction or increase the cost of acquiring the candidate for our initial business combination.
Because
each SAILSM security contains one-fourth of one redeemable warrant and only a whole warrant may be exercised,
the SAILSM securities may be worth less than units of other blank check companies.
Each
SAILSM security contains one-fourth of one redeemable warrant. Pursuant to the warrant agreement, no fractional
warrants will be issued upon separation of the SAILSM securities, and only whole SAILSM securities
will trade. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will,
upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued to the warrant
holder. This is different from other offerings similar to ours whose units include one share of Class A common stock
and one whole warrant to purchase one whole share. We have established the components of the SAILSM securities
in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination since the warrants
will be exercisable in the aggregate for one-fourth of the number of shares compared to SAILSM securities that
each contain a whole warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target
businesses. Nevertheless, this SAILSM securities structure may cause our SAILSM securities to
be worth less than if a SAILSM securities included a warrant to purchase one whole share.
A
provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
Unlike
most blank check companies, if (x) 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 of common stock, (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, the exercise
price of the warrants will be adjusted to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the
$18.00 per share redemption trigger prices will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market
Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted (to the nearest cent) to
be equal to the higher 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.
A
market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
The
price of our securities may vary significantly due to one or more potential business combinations and general market or economic
conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained.
You may be unable to sell your securities unless a market can be established and sustained.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on 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 GAAP, or international financial reporting standards as issued
by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements
may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States),
or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some
targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules
and complete our initial business combination within the prescribed time frame.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage
of certain exemptions from disclosure requirements available to “emerging growth companies” or “smaller reporting
companies,” this could make our securities less attractive to investors and may make it more difficult to compare our performance
with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor 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 Class A
common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would
no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our
securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as
a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be,
there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We
have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies
may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of
audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the
market value of our shares of common stock held by non-affiliates exceeds $250 million as of the prior June 30th, or
(ii) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our shares
of common stock held by non-affiliates exceeds $700 million as of the prior June 30. 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.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate a 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, 2021. Only in the event we are deemed to be a large accelerated filer or an
accelerated filer and no longer qualify as an emerging growth company, will we not be required to comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are
a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared
to other public companies because a target business with which we seek to complete our initial business combination may not be
in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the
internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such acquisition.
Provisions
in our amended and restated certificate of incorporation may inhibit a takeover of us, which could limit the price investors might
be willing to pay in the future for our shares of Class A common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. These provisions include a staggered board of directors, the ability
of the board of directors to designate the terms of and issue new series of preferred stock, and potential payments owed with
respect to our alignment shares, which may make more difficult the removal of management and may discourage transactions that
otherwise could involve payment of a premium over prevailing market prices for our securities.
Provisions
in our amended and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against
our directors and officers.
Our
amended and restated certificate of incorporation will require, unless we consent in writing to the selection of an alternative
forum, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach
of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting
a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our amended and restated
certificate of incorporation or bylaws, or (iv) any action asserting a claim against us, our directors, officers or employees
governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, except any claim
(A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject
to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the
Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court
or forum other than the Court of Chancery, and (C) for which the Court of Chancery does not have subject matter jurisdiction.
If an action is brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of
process on such stockholder’s counsel.
Although
we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits
to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision
may have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed
to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Unless
we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will
be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. A court
may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of
discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived our compliance
with federal securities laws and the rules and regulations thereunder.
Notwithstanding
the foregoing, our amended and restated certificate of incorporation will provide that the exclusive forum provision will not
apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts
have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought
to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Our
warrant agreement 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 provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of
or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts
of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably
submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will
waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding
the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created
by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and
exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to
have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which
is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New
York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of
any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state
and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum
provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any
such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This
choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our
warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings,
we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely
affect our business, financial condition and results of operations and result in a diversion of the time and resources of our
management and board of directors.
Cyber
incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial
loss.
We
depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those
of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure,
or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.
Since
only holders of our alignment shares will have the right to vote on the election of directors, upon the listing of our shares
on Nasdaq, Nasdaq may consider us to be a “controlled company” within the meaning of the Nasdaq rules and, as a result,
we may qualify for exemptions from certain corporate governance requirements.
After
completion of our initial public offering, only holders of our alignment shares will have the right to vote on the election of
directors. As a result, Nasdaq may consider us to be a “controlled company” within the meaning of the Nasdaq corporate
governance standards. Under the Nasdaq corporate governance standards, a company of which more than 50% of the voting power is
held by an individual, group or another company is a “controlled company” and may elect not to comply with certain
corporate governance requirements, including the requirements that:
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we
have a board that includes a majority of “independent directors,” as defined
under the rules of Nasdaq;
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we
have a compensation committee of our board that is comprised entirely of independent
directors with a written charter addressing the committee’s purpose and responsibilities;
and
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we
have a nominating and corporate governance committee of our board that is comprised entirely
of independent directors with a written charter addressing the committee’s purpose
and responsibilities.
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We
do not intend to utilize these exemptions and intend to comply with the corporate governance requirements of Nasdaq, subject to
applicable phase-in rules. However, if we determine in the future to utilize some or all of these exemptions, you will not have
the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements.
If
we effect our initial business combination with a company located outside of the United States, we would be subject to a variety
of additional risks that may adversely affect us.
If
we pursue a candidate for our initial business combination with operations or opportunities outside of the United States for our
initial business combination, we may face additional burdens in connection with investigating, agreeing to and completing such
initial business combination, and if we effect such initial business combination, we would be subject to a variety of additional
risks that may negatively impact our operations.
If
we pursue a candidate for our initial business combination with operations or opportunities outside of the United States for our
initial business combination, we would be subject to risks associated with cross-border initial business combinations, including
in connection with investigating, agreeing to and completing our initial business combination, conducting due diligence in a foreign
jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes in the purchase price
based on fluctuations in foreign exchange rates.
If
we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
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costs
and difficulties inherent in managing cross-border business operations;
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rules
and regulations regarding currency redemption;
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complex
corporate withholding taxes on individuals;
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laws
governing the manner in which future business combinations may be effected;
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exchange
listing and/or delisting requirements;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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local
or regional economic policies and market conditions;
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unexpected
changes in regulatory requirements;
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tax
issues, such as tax law changes and variations in tax laws as compared to the United
States;
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currency
fluctuations and exchange controls;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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employment
regulations;
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underdeveloped
or unpredictable legal or regulatory systems;
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protection
of intellectual property;
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social
unrest, crime, strikes, riots and civil disturbances;
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regime
changes and political upheaval;
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terrorist
attacks, natural disasters and wars; and
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deterioration
of political relations with the United States.
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We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial
business combination, or, if we complete such combination, our operations might suffer, either of which may adversely impact our
business, financial condition and results of operations.
We
are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have
increased both our costs and the risk of non-compliance.
We
are subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the
protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory
measures under applicable law. Our efforts to comply with new and changing laws and regulations have resulted in and are likely
to continue to result in, increased general and administrative expenses and a diversion of management time and attention from
seeking a business combination target.
Moreover,
because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve
over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters
and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply
with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.